20:26
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LSDefine
Simple English definitions for legal terms
tax audit
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A quick definition of tax audit:
A tax audit is a review of an individual or organization's tax return by the Internal Revenue Service (IRS). The purpose of the audit is to ensure that the taxpayer has accurately reported their income and deductions and complied with tax laws and regulations. During the audit, the IRS may examine the taxpayer's financial records and supporting documents. Taxpayers may be selected for an audit randomly or based on certain criteria, such as high deductions or unusual income. It is important for taxpayers to keep accurate records and be prepared for a potential audit.
A more thorough explanation:
A tax audit is a formal examination of an individual's or organization's accounting records, financial situation, or compliance with tax laws and regulations. The Internal Revenue Service (IRS) conducts tax audits to ensure that taxpayers are reporting their income and deductions accurately and paying the correct amount of taxes.
- Correspondence audit: An IRS audit of a taxpayer's return conducted by mail or telephone.
- Field audit: An IRS audit conducted at the taxpayer's business premises or lawyer's offices.
- Office audit: An IRS audit of a taxpayer's return conducted in the IRS agent's office.
These examples illustrate different types of tax audits that the IRS may conduct. A correspondence audit is conducted through mail or telephone, while a field audit is conducted at the taxpayer's business premises or lawyer's offices. An office audit is conducted in the IRS agent's office. These audits are conducted to ensure that taxpayers are complying with tax laws and regulations.