An IRS audit is a review/examination of an organization’s or individual’s accounts and financial information to ensure information is reported correctly according to the tax laws and to verify the reported amount of tax is correct.

What is an examination of tax returns by the IRS called?

Audit. An IRS review, or examination, of a tax return.

How long does an IRS examination take?

The IRS does these audits by mail, generally notifying taxpayers within seven months of filing. Mail audits usually wrap up within three to six months, depending on the issues involved and how quickly and completely you respond to the audit letter.

What type of tax stays the same regardless of income?

Proportional taxes
Proportional taxes, or flat taxes, are taxes for which the rate stays the same, regardless of income. Property taxes are proportional.

How does the IRS do a tax examination?

The discriminant function system is a computerized system used by the IRS that scores individual tax returns. If your return has a high score, the IRS may choose to review your return. The IRS conducts tax examinations by mail, in the field or at a business. The nature of the audit will generally determine where the examination will take place.

What does the IRS look at on a tax return?

Your examination notice from the IRS will list the specific areas of your return subject to examination. In most cases, the IRS will look at your total reported income by examining your financial statements, bank deposits and other investments.

How are tax returns selected for an audit?

The IRS selects taxpayer returns for examination for a variety of reasons. For example, the IRS uses random sampling, information comparison and computerized screening to select returns for audits. The discriminant function system is a computerized system used by the IRS that scores individual tax returns.

What’s the difference between a tax audit and an examination?

These two terms are used to define the same IRS-initiated process of examining tax returns in order to highlight any discrepancies or filing errors that could lead to increased tax payments for filers.