No one likes to receive their notice in the mail that their tax return is being audited. For many, it strikes fear into their souls and they can't sleep for days.

It is important to realize just what an audit is. The role of the auditor is simply to determine the correctness of your tax return. That's all! In undertaking that role, the auditor will want to make sure that you have properly reported all of your income and properly taken all allowable deductions. It is your job to provide the supporting documents to backup your income and deductions. If you have this documentation, then you shouldn't have a problem. It's when you don't have the documentation that problems arise.

There are basically three (3) types of audits:

1 - Correspondence Audit: This is the most common type of audit, which is done by mail. Usually, the IRS is asking for verification of a deduction, or perhaps asking about a missing 1099 interest income amount that they show should be on your return, that you may have overlooked. You simply send in verification of the expense requested or, in the case of the overlooked 1099, pay in the extra amount of tax requested. Once done, the audit is over.

2 - Office Audit: This audit occurs when the IRS decides it wants to look at "significant items" on your tax return. You receive a notice in the mail stating the time and place to come and to bring documentation to backup these "significant items". Once you are there, the IRS often may go on a "fishing" expedition, trying to find out things that were not listed on the audit notice. This where you need professional service, for if you are not careful, the IRS will try to intimidate you and get you to incriminate yourself or give out too much information.

3 - Field Audit: This is an audit where the IRS agent comes out to your home or office and conducts the audit. Often, this is a more serious audit, in that the IRS may be looking at the entire return, and not just "significant items". They may want to look at several years, in fact. It can be a very daunting task, if you try and do it alone.