While no one wants to experience an IRS audit, those who rely on a certified public accountant can rest easy come tax time. When you enlist the services of a conscientious professional from Central Kentucky’s Cloyd & Associates PSC, your return is unlikely to contain errors that will result in hefty penalties. Even with expert guidance, though, it’s natural to have questions about the auditing process. Here, these London experts answer the most frequently asked queries surrounding audits.
London Accountant Answers Auditing FAQ
How Does the IRS Choose Whom to Audit?
The IRS relies on a few different methods when choosing audit candidates. One method is a computerized screening process that identifies returns that deviate from statistical norms. There is also “audit by association,” which means, if your return involves transactions with other taxpayers who have been flagged, you may be audited, too.
How Will I Know If I Am Being Audited?
The IRS notifies all those selected via mail. For this reason, it is essential to update your address whenever you relocate. Although you can update it simply by putting the new address on your next tax return, doing so means you will not receive any mail from the IRS until you file again. The IRS will never notify you of an audit by phone, so if you receive such a call, do not provide any personal information.
How Far Back Can the IRS Go to Conduct an Audit?
In general, the IRS reviews returns filed within the last three years for audit. However, if a return contains a substantial error or omission, they may go back further. It is rare for the IRS to audit returns that are more than six years old, and most of the returns they audit are no more than two years old.
How Long Does the Process Take?
It is impossible to predict how long an audit will take because so many factors can influence the duration. These factors include the kind of audit, the complexity of the errors, omissions, or discrepancies, and the availability of essential documents and receipts. They also include the availability of the taxpayer and their accountant, as well as the taxpayer’s response to the findings.
If you need help with tax planning or recently received notice that the IRS is preparing to conduct an audit, turn to an accountant at Cloyd & Associates PSC. With offices in London, Corbin, and Lexington, KY, this financial firm is proud to serve the personal and business needs of clients throughout Laurel County. Visit their website to learn about all the financial services they provide, or call (606) 864-8110 to schedule a consultation today.