The IRS has the legal right to audit any tax return it so chooses for any reason it chooses.

The threat of an audit is what makes most taxpayers take seriously their obligation to comply with the letter of the law.

The odds of being audited are generally very low, therefore, if you get an audit notice, you should take it very seriously.

It is probable that the IRS selected your return because its computer system scored it as having a high likelihood of inaccuracy and an IRS official reviewed it and decided that it should be examined.

What makes an IRS audit so daunting is that the burden of proof is on the taxpayer to show that he has included all of his taxable income and provided receipts for all of his tax deductions.

It is not enough that your return is accurate. You must be able to PROVE its accuracy.

If your return was selected and the conduct of the audit is not handled properly, the following might occur:

• An accuracy related penalty will be assessed (20% of the underpayment)
• A substantial understatement penalty will be assessed (20% of the underpayment)
• A civil fraud penalty will be assessed (75% of the underpayment)
• A criminal referral will be made
• The IRS will expand its audit to other tax years
• The IRS will expand its audit to related taxpayers
• The IRS will contact third parties about your tax return

Because of these risks, it is highly recommended that you hire a qualified, experienced tax attorney to represent you in connection with an IRS audit.

The presence of an attorney in the audit process will help you avoid making statements or presenting documents to the IRS that may result in the occurrence of one of the above, undesirable events.

More importantly, by having a tax attorney involved early in the audit process you are putting the IRS on notice that:

a) you believe your tax return is correct as filed; and

b) you are prepared to prove it in Tax Court if necessary.