Receiving letters from friends and loved ones? In a word, great. Receiving letters from the IRS or hearing from a revenue agent? In a word, terrible.
If you’ve ever had to deal with the IRS outside of filing your tax return and getting your tax refund, you know what we mean. For most taxpayers, any interaction with the IRS is stressful, whether it’s an audit or a major tax debt.
Each letter you receive is a physical reminder that “you’re dealing with the IRS.” (Cue dun-dun-dunnnnn! music cue.) They can make your heart sink into your stomach and drive you to complete inaction, even if you fully understand that your tax issue will never simply vanish into thin air!
Your first audit is every bit as intimidating. Hey, you won’t catch any judgment from us—it’s scary to learn the IRS is auditing you! And it’s a heck of a lot scarier when you meet your first IRS representative.
Should you ever have a run-in with an IRS representative during an audit, you should be prepared for it. A big part of that is learning what they can—and can’t—do.
We’re here to answer some of the most basic and important questions about IRS representatives: revenue officers, revenue agents, and special agents. Below, we’ll walk you through questions about IRS revenue agents, their primary purpose and job responsibilities, and how you can deal with them.
(Aside from, you know, calling us.)
Revenue agents are the primary IRS professionals who deal with audits of individuals, businesses, nonprofits, and the like. They’re a lot like accountants. They focus mostly on assessments, financial reviews, and the audit process in general, which sets them apart from IRS revenue officers (who deal more with enforcement and collections).
Since revenue agents are mostly responsible for the tax auditing process, the IRS will send a revenue agent when an audit has been triggered. No surprises there.
What may surprise you is that most audits aren’t actually triggered by humans! Instead, computers comb over every tax return, searching for abnormalities and inconsistencies:
An audit can be triggered by unclear spelling or bad math, while others may be triggered because your business used a vendor that was also audited. Of course, missing income streams and suspicions of offshore banking or tax evasion may trigger an audit, too.
However, being audited won’t automatically result in an IRS revenue agent showing up at your house. No way! You’ll first hear from the IRS by mail when they notify you of the audit, what info they may need, and next steps. Your first IRS audit is no doubt scary, but most can be resolved by mail. You wouldn’t believe how many audits are resolved with an amended return, a correction, or a clarification.
The revenue agent doesn’t come into your audit with any agenda outside of getting clear insight into your business’s finances.
In a simple audit, they may just look to verify info from your tax return, like proof of a dependent you claimed on your tax return or verification of the home office you deducted as a business expense.
In a more extensive audit, like one for a business, review may take days or weeks. The revenue agent might look into financial info to verify that all the financial statements line up with the filed tax return.
You should always aim to respond promptly to any communication from the IRS, and that definitely includes notice that you’ve been audited. We recommend you also enlist support from a tax specialist or tax attorney.
For most audits, which are relatively minor and easily resolved affairs, a tax professional will help guide you through the process, make you feel more comfortable, and often correspond with the IRS on your behalf. In a more serious or extensive audit, a tax expert will be able to offer their expertise or legal guidance, give you insight into the tax codes related to your case, and potentially even be present during your field audit.
Your first audit will be scary, even if it’s a minor one. But we don’t think it should have to be.
Whatever brought the IRS to review your tax return, it’s always a smart decision not to go it alone. Whatever the result of your tax audit—owing money, amending your return, or dealing with something more serious—a tax team will help you secure the best results possible.
Remember, we’re always here for you. Give us a call, and let’s defend your audit.