Tax Law

3 Reasons For An IRS Tax Audit And How Can An Attorney Help You


No person wants to get audited by the IRS. But, unfortunately, it happens to many people every year. Nearly, 13 tax returns filed by those earning less than $25,000 have been audited in 2021. 

There are innumerable reasons why the IRS might choose to audit you, and it can be terrifying if people don’t know what to do.

This article will explain the three most common reasons for an IRS tax audit and how an attorney can help you through the process. Stay calm and don’t panic – with the help of an experienced legal practitioner, you can get through this.

What Is A Tax Audit

Tax Audit

The first question I am going to address is – What Is A Tax Audit?

A tax audit is when the IRS assesses the tax return information to ensure the reported data in the tax documents is correct. The four kinds of tax audits are taxpayer, field, correspondence, and compliance measurement. 

Three Crucial Reasons For An IRS Tax Audit

IRS Tax Audit

Failing to document and report your income on the tax return is a crucial audit trigger. That’s mainly because the income which goes unreported on the tax return goes untaxed as well.

Generally, the IRS includes the tax returns filed within the last three years in an audit. If any substantial error is identified, they can add additional years as required. 

Below Are The Top 3 Reasons For IRS Tax Audit:

Top 3 Reasons For IRS Tax Audit

1) Underreporting The Income

The IRS can flag one for an audit when they don’t report all their income. It is especially common if you’re a small business owner or self-employed. So ensure to keep good records and report all of your income, even from cash transactions.

If it thinks you’ve underreported your income, they may do a “mail audit.” So it is when they request additional information through the mail. If one gets one of these, it’s important to respond promptly and provide the requested information.

If the organization believes you’ve intentionally underreported your income, they may do a field audit. It involves an in-person meeting with an IRS agent.

An attorney can help people respond to a mail audit and prepare for a field audit. They can also help their clients if the IRS accuses them of tax fraud.

2) Business Deductions and Losses

The second reason for an IRS tax return audit is taking too many business deductions and losses on your taxes.  If you’re self-employed or have a business, they will closely scrutinize the deductions to ensure you are not taking advantage of any tax breaks.

An experienced tax lawyer can help one determine which deductions they are eligible for and how to document them properly.

Business expenses must be necessary to be deductible. Additionally, one can only deduct a portion of the expense related to their business income.

For example, if you use your home office for business and personal purposes, you can only deduct a part of the mortgage interest, property taxes, and utilities.

An attorney can help you determine the percentage of your home office expenses deductible.

3) Undocumented or Incomplete Income

If you receive a Form W-­‐‑22, the IRS has questions about your income. It can happen for several reasons, such as not reporting all of your tips or failing to document other forms of income.

An attorney can help the client determine what documentation the statutory body requests and how to provide it. For example, the organization may question whether they have underreported their income in some cases.

If this is the situation, the attorney can help their clients determine if there are any expenses they can deduct that would lower the taxable income.

Lawyers can also negotiate with the IRS on their clients’ behalf to reduce the amount of taxes they owe.

How Long Should You Keep Your Tax Records In Case Of An Audit?

It’s advisable to keep the Tax Records for seven years. However, it doesn’t mean that once this time is over, you will throw away the documents. You must keep them secured in case you need them in the future.


Whether you believe you did everything right on your taxes or not, it’s in your best interest to go for the guidance of an attorney if you are being audited.

An IRS audit is nothing to take lightly, and the assistance of a legal professional can ensure the right outcome for people and their finances. Have any questions regarding this? Let’s meet in the comment section below. Also, stay tuned with us to get more intriguing topics like this in the future!

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Nilanjana Basu
Nilanjana is a lawyer with a flair for writing. She has a certification in American Laws from Penn Law (Pennsylvania University). Along with this, she has been known to write legal articles that allow the audience to know about American laws and regulations at ease.

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