A field audit is an in-person audit of tax returns conducted by the IRS at the location of the person or company being audited. It is typically conducted when the IRS needs to investigate the business and its operations first hand. The audited party may have representation, typically a member of the accounting firm that prepared the tax return.
A field audit is an audit of tax returns conducted by an agent of the Internal Revenue Service (IRS) in the United States that takes place at the residence or place of business of the person or company being audited. The IRS often requires it when the correspondence between the parties is not adequate to resolve the problem. Those who are subject to a field audit can have their contracted tax professional intercede on their behalf. IRS officials require all necessary records to be provided so they can see if any additional chargers are secured outside the scope of the audited party’s initial tax return.
There are many different types of audits that the IRS can perform if there is any type of discrepancy or problem with a specific tax return. If the problem is small or the amount in question is not significant, these audits are usually done by mail via letters to the parties involved. The audited party can make any necessary corrections or prepare a response to the audit. In larger cases, a field audit may be carried out, which is carried out at the actual site of the company in question.
While there are no set guidelines that the IRS uses to determine what types of tax returns call for a field audit, a field audit typically occurs when the agency needs to actually interact with the party involved. This is because the IRS may need to investigate the business and its operations first hand. The IRS will contact the business or person being audited and set up an appointment to interview the directors and collect the necessary business records.
An investigator chosen to conduct a field audit is someone who is adept at both uncovering illegal tax practices and negotiating settlements with those who may be behind on their payments. He can do this by visiting the place of business and seeing firsthand how daily operations are conducted. Detailed consultations of the audited parties will also be made to determine if any necessary information remains from the prepared statement.
The audited party in a field audit may have representation, which is typically 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 company’s side of the story. In addition, the representative may attempt to move the meeting away from the company’s place of business, either to an IRS office or to the representative’s firm.
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