What Is an IRS Office Audit?

An IRS office audit, also known as a service center audit, is an in-person examination that occurs in the local IRS office. Since it is conducted face to face with an auditor, it is crucial to consult a tax attorney to discuss how to prepare for the audit and to represent you at the audit to avoid making mistakes that could worsen the situation.

How Does an Office Audit Differ from Other Types of Audits?

There are two other types of audits besides an office audit. A correspondence audit is conducted by mail, while a field audit occurs in-person at the taxpayer’s home, place of business or accountant’s office. In addition to a different location for each audit type, they each have their own procedures and forms for notification.

Who Is Most Likely to Receive an Office Audit?

Taxpayers may be selected for audit because of discrepancies between information the taxpayer provided and data from other sources such as W-2s from employers or 1099 interest statements from banks.

In addition, the IRS uses statistical formulas to score tax returns based on comparisons between returns of other similarly situated taxpayers. If the taxpayer’s income or deductions are outside the statistical range, the return may be flagged for audit.

Other reasons taxpayers may be audited include because they are wealthy, had dealings with another party who was or is being audited or their return exhibited other common red flags. Sometimes, audits are the result of random checks by the IRS.

Businesses and high-net-worth individuals are more likely to be audited. Office audits may also be requested if there was a correspondence audit but there are too many records to mail and the taxpayer wishes to meet in person.

How Long Does an Office Audit Take?

Office audits are usually scheduled within 28 to 35 days of the initial contact. In the office, it usually lasts two to four hours. However, the auditor may request additional documents which may be sent after the meeting.

How Do You Prepare for an Office Audit?

In the notice of the audit, the IRS will state what records the agency wants to see. These may include invoices, receipts, insurance reports, contracts, loan agreements, employment documents and other relevant records. These must be brought to the meeting with the auditor.

It is important to discuss preparation for the audit with a tax attorney who can guide you as to how to respond to questions and develop a strategy to help you minimize liability. Note that at the audit, you can speak on your own behalf or have the attorney represent or accompany you.

Can You Appeal an Office Audit?

Once you are notified of the audit results, you have 30 days to respond starting from the date of the letter. If you disagree with the notice, you can request a conference with an IRS manager, seek mediation or file an appeal if there is enough time remaining on the statute of limitations.

Do You Need a Tax Attorney to Assist You in an Office Audit?

Representing yourself in an office audit is not recommended. Audits can be complicated and require an understanding of IRS rules and procedures. You may also mistakenly reveal more information than required and make matters worse by admitting liability or expanding the scope of the audit. It is best to work with a tax attorney who can assist you in your response and represent your interests before the auditor.

Audits are stressful especially when you are face to face with an auditor. If you have received an audit notice, contact one of our tax lawyers to help you achieve a positive outcome in your case.