Video: IRS Audits

In this lesson, Nick Palazzolo, CPA, demystifies the procedures and selection methods behind IRS audits. He begins by explaining that audits are mechanisms to verify the accuracy of income and deductions reported by taxpayers. Nick throws light on advanced statistical models used by the IRS to identify returns that might contain errors or offer significant revenue if corrected, alongside other methods such as random selection and targeting past offenders. He elaborates on the types of audits from the simple correspondence audits, typically resolved by mail, to more complex office and field audits which require face-to-face interactions and detailed examinations of records. Furthermore, Nick clarifies the timeframe for conducting an audit, the statute of limitations, and describes the steps that follow an audit's completion, including possible resolutions, appeals, and the process for fast track remediation, especially for small businesses and self-employed individuals. This lesson is crucial for understanding how to navigate the waters when faced with an IRS audit.