Office audits generally regard Schedule A (Itemized Deductions), Schedule C, and Schedule E (Rents and Royalties) issues for individuals who earn less than one hundred thousand dollars ($100,000 USD). Office audits usually deal with a particular issue and usually concern only a particular year. However, auditors frequently open up multiple years when they find an issue that may be inaccurate on several prior returns. Office audits consist of an initial interview with an IRS Examiner. The IRS Examiner will seek information relating to the financial history, nature of employment, and will look for issues that suggest the potential for underreporting of income or deductions which should be disallowed. The responses given by the taxpayer could potentially expand the scope of the audit or open up multiple years of returns to review.
Office audits have the potential to be very costly and/or time consuming. Taxpayers can expect the auditor to take copious notes during the interview and even innocent statements can be misconstrued or taken out of context. This could expand the scope of the audit or, in certain circumstances, expose the taxpayer to potential criminal liability. The financial records or substantiation you are asked to provide will be scrutinized in great detail. Office auditors are well-trained in the issues they are assigned to audit. Taxpayers are strongly advised to level the playing field by having a qualified tax attorney represent you during your office audit. This can significantly decrease your overall tax liability and assure that you are not taken advantage of by the representative.
If you have any questions or if we can further assist you, please contact our San Diego IRS audit attorneys today.
For more information, please see: