An audit reviews an individual’s or an organization’s financial accounts and information to ensure that information is being reported correctly and the accurate tax amount is paid. Audits can be done by both the Internal Revenue Service (IRS) and Arizona Department of Revenue.
There are three ways in which those who undergo an audit are chosen by the IRS. These include a random selection, document matching (payer records don’t match documents reported), and related examination (when payer is involved in issues or has relations with an individual who is going through an audit).
An audit can be done either by mail or in-person. An individual or business will be notified of audit by the IRS through mail or telephone.
During an audit by the IRS, there are specific records that will be needed including records used to prepare tax return.
Once the IRS has examined records, they will determine how the audit will be concluded. This includes having no change (records have met the tax paid), agreed (IRS has proposed changes that the taxpayer has agreed to), and disagreed (IRS has proposed changes that the taxpayer has disagreed to).
An audit with the Arizona Department of Revenue begins when a letter has been sent to an individual for clarification about tax records which must be responded to within 30 days.
The Arizona Department of Revenue will then determine whether there is no adjustment or will propose an adjustment along with penalties for not agreeing to adjust amount.
If an individual disagrees with the amount adjusted, then that taxpayer must contact their auditor.
When audited by either the Internal Revenue Service (IRS) or the Arizona Department of Revenue, it is very important to contact a tax attorney. A tax attorney can represent an individual or a business during an audit and can help collect evidence of records needed for the audit. Otto Shill has over 25 years of tax experience and he can provide necessary advice to protect your rights during an audit.
Call JacksonWhite at (480) 464-1111 to discuss your case today.
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