These types of businesses are often a target for IRS audits to determine the accuracy of reporting. G. Self-Employed or Cash Employees . H. Taxpayer has prior Tax Deficiencies . This is especially true is the deficiency was discovered through an audit procedure. It is surprising the number of audits that are conducted due to information provided to the IRS from third parties.
Many people think it is a good idea to tell everyone how they are beating the tax system.
Little do they know all it takes is one phone call from someone they know to have the IRS knocking at the door. Once you receive an audit notice from the IRS, you should first read the letter carefully and see exactly what the IRS wants from you. Stay calm because the IRS may only need some simple information such as your signature on the return or a social security number. This type of audit is commonly used to correct minor mistakes. The IRS will send a letter to the taxpayer reporting their findings.