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How Long Does an IRS Audit Take? [VIDEO]

How long does an IRS Audit take represented by a clock and a gavel

The duration of an IRS audit can be a period of uncertainty for many taxpayers. John Milikowsky, founder of Milikowsky Tax Law, breaks down what to expect time-wise when you’re faced with an IRS audit, whether you’re an individual taxpayer or a business owner.

Key Insights

Individual Returns

 An audit for individual returns typically spans four to six months, provided all documentation is submitted promptly and queries are answered.

Business Returns

Audits involving businesses can extend from six months to a year due to the increased volume of records and transactions.

Complexity and Expansion

The potential for an audit to expand to additional years or recently filed returns adds complexity and could extend the timeline.

How Long Does an IRS Audit Take?

How long you’ll be dealing with an IRS audit is not set in stone. The timeline varies significantly based on several factors, including the type of return being audited and the complexity of your financial records.

Let’s take a look at some options.

For Individual Taxpayers

If your tax situation is relatively straightforward and you do not own a business, you can expect the audit process to last around four to six months. This assumes that you are organized and responsive to IRS requests.

For Business Owners

Business owners or those with more complex tax situations should prepare for a longer audit process, lasting anywhere from six months to a full year. The more extensive record-keeping required for business operations, such as inventory and a multitude of transactions, necessitates a lengthier review period.

Correspondence Audits: A Quick Resolution

For taxpayers undergoing correspondence audits, where the IRS conducts the audit by mail, the process typically wraps up within a couple of months. Here’s a simplified overview:

  • Receive an audit letter: The IRS notifies you by mail of the items they intend to examine.
  • Submit requested documents: You have 30 days to respond with the requested documentation.
  • IRS review: The IRS has up to 30 days to review the information provided.
  • Auditor’s decision: The auditor may request additional details, accept your tax return as filed, or propose adjustments.
  • Resolution: If you disagree with the decision, you can appeal to the U.S. Tax Court within 90 days.

Office Audits: In-Person Meetings

For office audits requiring face-to-face meetings with an IRS agent, the process typically spans 3-6 months. Here’s what to expect:

  • Receive notice: The IRS notifies you of the audit and schedules an in-person interview.
  • Meeting with auditor: Attend the scheduled interview and provide requested documentation.
  • Auditor’s review: The auditor evaluates your documents and may request additional information.
  • Resolution: If your tax return is accepted, the audit concludes; otherwise, you can petition the Tax Court within 90 days.

Field Audits: Complex and Time-Consuming

Field audits, often for small business owners, are the most complex and can last 4-6 weeks to a year. Here’s a glimpse into the process:

  • Initiation: The IRS sends notification and schedules an on-site meeting at your business or home.
  • Interview and document review: Meet with the auditor and provide necessary documentation.
  • Further review: The auditor may conduct an extensive review of your tax return and supporting documents.
  • Resolution: The audit concludes with acceptance or adjustments to your tax return.

Factors Affecting the Duration of a Tax Audit: What You Need to Know

Navigating through a tax audit can be a daunting experience, especially when considering the uncertainties surrounding its duration. The Internal Revenue Service (IRS) outlines several key factors that significantly influence the length of an audit process. Understanding these factors can provide valuable insights and help taxpayers better prepare for what lies ahead.

Key Factors Influencing Audit Duration

Type of Audit: The type of audit you undergo plays a crucial role in determining how long the process will take. Correspondence audits, office audits, and field audits each have distinct timelines and requirements.

Complexity of the Issues: The complexity of the tax issues under scrutiny can significantly impact the audit duration. More intricate financial matters may necessitate additional time for thorough examination and analysis.

Availability of Information Requested: Timely access to the requested information is essential for expediting the audit process. Delays in providing necessary documentation can prolong the duration of the audit.

Availability of Both Parties to Meet: Scheduling meetings and interviews between the taxpayer and IRS auditor can affect the audit timeline. Flexibility and cooperation from both parties can help streamline the process.

Agreement/Disagreement with Findings: The level of agreement or disagreement between the taxpayer and the IRS regarding audit findings can influence the duration. Resolving discrepancies may require additional time and negotiation.

Common Reasons for Extended Audits

Failure To Respond: Prompt response to audit notices and requests for documents is crucial. Failure to comply within the specified timeframe can result in delays and potential penalties.

Multiple Adjustments by the IRS: Extensive adjustments made by the IRS auditor to your tax return may prolong the audit process. Additional documentation and review may be necessary to address these adjustments adequately.

Pursuit of Penalties: Audits involving suspected errors or fraud may lead to further investigation and potential penalties. Resolving these issues can extend the audit timeline significantly.

Appeals Process: Taxpayers have the right to appeal audit findings with which they disagree. However, the appeals process can add several months to the overall duration of the audit.

Small Business Audits: Small business audits often involve a thorough examination of financial records and documentation. The complexity of business operations and the volume of transactions may contribute to extended audit timelines.

Learn More About Milikowsky Tax Law

At Milikowsky Tax Law, we have over a decade of experience working with IRS and tax audits. We’re experts in defending business owners in the face of IRS or other government agency audits.Interested in learning more? Read on to learn how to respond to an IRS audit.