Few things can be as big of a setback to someone's individual or business finances than finding yourself on the wrong side of the Internal Revenue Service. The government will make sure that they get every penny that you owe in taxes from you. The IRS is not an entity to mess with.
That's why it is so important for you to make sure that you respond to any and all tax audits that come your way in an efficient and appropriate manner.
In this article, we'll take a look at the answers to the questions of how long does a tax audit take and what you should do if you ever find yourself on the receiving end of one.
How Long Does a Tax Audit Take?
There are a few different things to consider when thinking about how long a tax audit takes. The first thing to know is there is a statute of limitations on tax audits. The IRS officially has three years from the date of notifying you of their intent to audit you to actually complete the audit.
So rest assured that the audit will be completed in three years or less.
The IRS employee handbook dictates that auditors are held to the standard of auditing accounts within 26 months or less. So in all likelihood, you will typically be audited within that 26-month period.
However, the most valuable source of information for you is probably the average audit length, which is typically right around 11 months.
The Different Types of IRS Tax Audits
There are three different types of IRS tax audits.
The first type of audit is a mail audit. This is exactly what it sounds like — the IRS will request additional documentation to back up your numbers via mail. You can send the documents back via mail as well, and the audit will be closed out based on the accuracy of the information you send back.
The second type of audit is an office audit. Think of an office audit as the next level up from a mail audit. You will be requested to come into an IRS office near you to have your tax profile discussed in person.
Last but not least is a field audit. In a field audit, an IRS auditor will come out to your place of business to assess the accuracy of the information that you have submitted.
It is important to remember that audit notifications will never happen over the phone. The IRS only sends communication by mail. If you receive word of an IRS audit via phone, chances are that you are getting scammed.
What To Do If You Get Audited
As soon as the audit starts, you should hire a CPA firm that can prepare a tax audit defense for you. Otherwise, you could find yourself on the wrong end of hefty penalties and fees.
Protect Your Finances
There you have it. Now that you know the answers to the questions of how long does a tax audit take and how to prepare for one, be sure to take all of the necessary steps to protect your finances!
For more great personal finance articles, check out more of our blog today. Visit the Finance section to learn more about taxes, accounting, bookkeeping, and IRS tips.
