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How is a return selected for an audit?

The IRS elects to audit tax returns based on a number of factors. Selection for audit is not arbitrary; rather the return is first evaluated in a lengthy and thorough process. Then a final determination is made as to whether or not the return will go through the full audit process. Individual states, including Georgia, follow a similar process.

When a return is initially filed, it is compared to a random sample of returns that are similar in type. If there are questionable items on the return, it will be assigned to an auditor for review. The auditor can either accept the return as is, or flag any questionable items and forward it to an examination committee. The committee also has the option to accept the return as is, or to alternately pass it on to an auditor to be re-reviewed. The final auditor who reviews the return can accept the filed return at that point or can set up an appointment to conduct a full audit. If, in the interim, an amended return is filed, that does not negate the selection process.

A full audit may be conducted entirely by mail, or it can take place in your place of business or at an IRS office. Where the audit is conducted is determined by the IRS. The taxpayer has the right to make a request regarding the location of the audit, but requests will not necessarily be granted. The IRS will want to review documents in the location in which they are kept as a rule.

If someone finds themselves facing an IRS audit, it may be helpful to consult an attorney who has experience with audit defense. A knowledgeable attorney will be familiar with the audit process and may assist in preparing fully for the process.

Source: The Internal Revenue Service, "IRS Audit FAQs", November 26, 2014

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