You finally finished your tax return and just when it's finally off your mind, you get a letter from the Internal Revenue Service letting you know you're being audited.
Not all audits result in you having to pay more money to the IRS. Nevertheless, you may panic if get a letter. Are you going to have to pay a big fine? What does the IRS know about you that you don't?
Chances are you didn't do anything wrong knowingly. And despite the IRS' reputation, the agency knows people make mistakes and aren't trying to punish pure human error, says Erin Collins, National Taxpayer Advocate at the Taxpayer Advocate Service division of the IRS.
They also know that people don't love paying taxes and in some cases will purposely evade paying what they owe. That's the primary reason why the IRS audits the tax returns of individuals and businesses, Collins said.
What triggers an IRS audit?: Here are red flags that increase the chance of being audited
Tax audit definition
A tax audit occurs when the IRS wants to take a closer look at your return to ensure you're paying the correct amount you owe. As a result, you may have to share additional information like receipts to prove that you are eligible for a credit or deduction you claimed on your return.
How long should you keep your tax records in case of an audit?
Generally, the IRS recommends hanging on to your tax documents for three years and employment tax records for four years. But there are various circumstances where it recommends you keep them for a longer period of time.
How long does an IRS audit take?
There's no standard length of time an audit takes, the IRS says. That's because it depends on the complexity of the return and the factors that may have triggered the audit.
The length of time it takes to complete an audit can also depend on how accessible the information you need to present is, the availability of both parties for scheduling meetings and whether you agree with the findings uncovered during the audit process.
How far back can the IRS audit you?
An audit the IRS conducts on you can include returns filed within the last three years, according to the IRS.
"If we identify a substantial error, we may add additional years. We usually don't go back more than the last six years," a post on the agency's site states. "The IRS tries to audit tax returns as soon as possible after they are filed. Accordingly, most audits will be of returns filed within the last two years."
IRS audit phone number
The IRS doesn't have a phone number dedicated to handling audit inquiries. You can use the general IRS customer service number, (800)-829-1040, to speak with an IRS agent about your audit.