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What’s the Difference Between a Regular IRS Audit and a Targeted Audit?

Jun 5, 2024 | IRS, Operating Your Company

Everyone dreads the possibility of being audited by the Internal Revenue Service (IRS). While it’s better not to be audited, a marked difference exists between a routine IRS audit and a targeted audit. Although you cannot always avoid an audit, careful recordkeeping, and careful return preparation can reduce your risk of being audited — and help reduce the likelihood of an unfavorable outcome if you are selected for an audit.   

When is a Request for Information an IRS Audit?

Not all audits are alike — and not every question from the IRS means you are under an audit. Depending on the issue, the IRS may simply ask for an explanation or a correction through the mail. But if you receive a letter asking you to review one or more items on your return, this would be considered an audit. In such cases, the IRS is asking for actual proof of items on your return, rather than relying on your word. 

Why Am I Being Selected for an Audit?

Just because you’ve been selected for an audit does not mean there is an issue. The IRS uses several methods to select taxpayers for audits. The first method is through random selection and computer screening. When this method is used, returns are selected based only on a statistical formula that compares your tax return against what the IRS considers as “norms” for similar returns. These “norms” are developed from audits of statistically valid random return samples.   

The IRS also selects returns for “related examinations” when it identifies an issue or transaction with other taxpayers, such as business partners or investors. These audits are targeted and can be based on another return selected for an audit. After an auditor reviews the return, they will either accept it or forward it to an examination group if they identify something that is questionable.    

Common Reasons for IRS Audits

Apart from routine audits, there are also certain red flags the IRS looks for that can trigger an audit. For example, omitting income, reporting unusually large business expenses, not accounting for digital assets, and excessive deductions are common reasons for IRS audits. Other reasons the IRS may flag a return for an audit can include:

  • Math errors — Incorrect calculations and numbers that seem to be estimated on your return can put you at a greater risk of being audited. 
  • High income — If you’re a high-earner, it’s particularly important to be careful when reporting your income to avoid triggering an audit.
  • Unreported income — One of the most common reasons an IRS audit may be triggered is due to a failure to report all income.   
  • Too many deductions — Although there are many permissible deductions, reporting too many business losses or more expenses than income can raise red flags with the IRS.  
  • Too many charitable donations — You may trigger an audit if your charitable donations are disproportionate with your income.
  • Failure to report all stock trades — Not reporting capital gains income could lead to an audit. 

Most audits start with receiving a notification letter from the IRS. While there are several types of audits, many can be resolved simply by sending supporting documentation to the IRS by mail, along with an explanation. In some cases, face-to-face meetings are necessary. It’s best to have a knowledgeable tax attorney by your side who can guide you through the audit process and protect your interests every step of the way.      

Contact an Experienced New York Tax Attorney

IRS audits can be complex and it’s crucial to have an experienced tax attorney who can help you prepare for the audit and negotiate on your behalf to obtain a favorable outcome. Offering reliable representation to individual taxpayers, businesses, entrepreneurs, and corporations, Brinen & Associates provides counsel to clients for a wide variety of tax matters at both the state and federal levels. Call (212) 330-8151 or send us a message to learn more about how we can assist you.


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I formerly worked as a satellite employee from my home state of New Jersey. I ended my employment with my former employer in 2016. In 2018, I was sued by my former employer for $1.1 million in Illinois State Court. I was referred to Brinen & Associates, LLC by a friend who is a client of the firm. Brinen & Associates, LLC came highly recommended. I contacted Joshua Brinen and then had a consultation at his office with his colleague Mark White. Together, Messrs. Brinen and White explained my options...

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