A field audit is an in-person audit of tax returns by the IRS, usually required when correspondence is not enough to resolve an issue. It involves visiting the business or person being audited and reviewing their records. A tax professional can represent the audited party.
A field audit is an audit of tax returns by an agent of the Internal Revenue Service, or IRS, in the United States, which takes place at the residence or place of business of the person or business being audited. This is often required by the IRS when correspondence between the parties is not adequate to resolve the issue. Individuals subject to a field audit can have their hired tax professional intercede on their behalf. IRS officials require that all necessary records be provided so they can see if any additional shippers are warranted outside the scope of the controlled party’s initial tax return.
There are many different types of checks the IRS can run if there is some sort of discrepancy or problem with a specific tax return. If the problem is small or the amount involved is not significant, these audits usually take place by mail via letters to the parties involved. The audited party can then make the necessary corrections or prepare an audit response. In larger cases, a field audit can be performed, which takes place at the actual location of the business in question.
While there are no established guidelines that the IRS uses to determine which type of tax return requires a field audit, a field audit generally occurs when the agency actually needs to interact with the party involved. This is because the IRS may actually need to investigate the company and its operations firsthand. The IRS will contact the business or person being audited and set up an appointment to interview the principals and to gather the necessary business documents.
An investigator chosen to conduct a field audit is one who is skilled at both identifying illegal tax practices and negotiating settlements with those who may be in default on their payments. He can do this by visiting the business location and seeing first-hand how day-to-day operations are conducted. Detailed inquiries will also be made of audited parties to determine if there is any necessary information left out of the prepared report.
The party audited in a field audit may have representation, which is usually a member of the accounting firm that prepared the tax return in the first place. This representative acts as a buffer between the audited party and the IRS, handling all questions and presenting the firm’s point of view. In addition, the representative may attempt to move the meeting from the company’s place of business, to an IRS office, or to the representative’s business.
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