IRS Audits | VideoAmy Fox | 3/20/2013
Once you file your tax return, the IRS processes your documents electronically.
"The IRS is very good at matching what information has been reported to them with what is reported on the tax return you sent to the IRS and they are able to match those by computer to actually see what is on the tax return to see if you`ve actually reported all of your income," said Minot Liberty Tax Services Owner David Lakefield.
But, the IRS may ask to check your account and financial information to make sure all of it is correct.
Lakefield said, "High numbers of credits or refundable credits and those types of things compared to, you know, the average for your income. Those types of things would probably bring added scrutiny."
If the IRS contacts you, it does not mean there are any errors in your tax return.
"A lot of the letters that are generated are because someone got a w2 that they forgot or some other type of income that should have been on their return and wasn`t,” said Lakefield. “So, they get a letter generated and they either have to correct the return or explain why it should be included in the tax return."
But, before you go and shred all of your tax records, the IRS can request a tax audit at any time. So, Lakefield recommends saving all of your documents for 7 years.
"In most cases, by keeping the good records, it actually helps them to lower their taxability, you know, if they don`t keep track of the expenses that they may be entitled to a reduction,” explains Lakefield. “They may be cheating themselves."
All of the audits are done on a case by case basis with most being run after returns are processed. So, refunds are typically not delayed.
If you have questions or concerns about your taxes, go to www.irs.gov for more information.