As the 2023 tax season started two months ago, several taxpayers must have finished filing their returns. However, they suddenly get a letter from the Internal Revenue Service informing them they’re being audited. If you also experience this, do not fret; stay calm, and learn more about IRS audits.
It would be best to remember that not all audits require you to pay more money to the IRS. Most of the time, they would ask for additional information, such as receipts. According to the IRS, an audit is a review or examination of an individual’s or organization’s accounts and financial information to ensure the information is reported correctly and verify the declared tax amount is correct.
The IRS audit the returns filed within the last three years; however, they might add additional years if they find a substantial error. (Photo: Community Tax)
How Far Back Can the IRS Audit You?
Generally, the IRS audit includes returns filed within the last three years; the agency can also add additional years – not more than six – if they identify a substantial error. According to USA Today, the IRS usually audits the returns filed within the last two years.
The IRS sends a letter to taxpayers letting them know they’re being audited. The letter contains all the necessary information and what to do when audited. You can access the sample letter through this site.
If you receive the letter, the first thing you should do is carefully read what’s written in the letter and respond immediately in writing or by phone. Failing to respond could result in additional penalties, interest, and the possibility of forfeiting the ability to contest the charges.
