• The vast majority of taxpayers who file their taxes on an annual basis fear receiving notification of an audit, even if they have nothing to hide. An IRS audit consists of an interview with an auditor either by written correspondence or in person, who will examine receipts and income statements to ensure that everything on a tax return matches up. Being prepared can help individuals through the process, and can cut down on additional taxes owed.
  
  

Why Was I Chosen?

• In most cases, individuals are chosen for an audit because something on their tax filing did not add up. The majority of audits are done on those with a higher income and who take a lot of deductions. For example, as of 2010, the odds of an audit for a filer who earns between $25,000 and $100,000 per year are less than one in 100. The odds for an audit increase if a tax return has complex business or investment expenses, rental expenses, tax transactions without an explanation, or large charitable donations. If someone has given information to the IRS about false information on a person's tax return, the chances of an audit increase greatly.
  
  

What Do I Need?

• If you are selected for an audit, you need documentation showing that all deductions and stated income is correct and lawful. Individuals should have receipts for charitable donations as well as receipts for business transactions such as dinners with clients. Those who have claimed deductions for a home-based business should have a dedicated workspace that is not considered a part of the home's living area. It is also recommended that individuals who claim auto mileage expenses have a log of their daily travels complete with beginning and ending odometer readings. Consumers who are selected for an audit also have the right to have an attorney or CPA providing assistance throughout the process.
  
  

What if I Owe Additional Taxes?

• If the IRS auditor finds that you owe additional taxes, you have some options. If the tax bill will cause a financial problem, the IRS may negotiate with the taxpayer to accept a settlement for less than the full amount owed. The IRS will also allow the taxpayer to set up payment arrangements on a monthly basis, although interest will be charged until the balance is paid in full. Should you disagree with the decision of the auditor, you have the right to request a hearing with an appeals officer, who will then review the case to make a ruling. You also have the option to pay in full if you agree with the findings.