What is an IRS Audit?

Initially, the IRS implemented the audit system to help diminish the “Tax Gap”, which is the difference between what taxpayers owe to the IRS and what the IRS actually receives.

Most audits are completely random, but some get issued to specific individuals who have suspicious activity.

But let’s assume that you didn’t embezzle thousands of dollars from your work, and you just received an honest, routine audit. You may feel severely unlucky, but don’t worry; here is what you need to know:

The majority of audits are computer-generated.

Your tax return data, along with the tax return data of every other taxpayer, gets implemented into the IRS National Computer Center, which then generates what is known as a DIF score.

The higher your DIF score, the more prone you are to being audited.

There are hundreds of factors that determine your DIF score, but this process is highly secretive. In fact, there are only a handful of people in the IRS who know how this algorithm works.

One of the few known factors is Total Positive Income, which includes all the income you have received from any investments or services (excluding any deductions). The higher your TPI (total positive income), the higher your DIF score may be.

If you haven’t received an audit, know that the IRS ONLY sends audit notices by mail. They never initiate via phone call.

Typically, the IRS will conduct the audit one of two ways:

1. Mail
2. In-person interview

If your audit is conducted by mail, the IRS may ask to receive further information regarding tax returns within the last three years, including:

• Income
• Expenses
• Itemized deductions

To get more in-depth, here is a complete list of what documents the IRS may seek.

If the IRS requests you complete the audit in person, it can take place in two different settings: your local IRS office (office audit) or at your house, business, or accountant’s office (field audit).

Regardless if your audit is purely via mail or requested by interview, interactions are specified in the examination notice.

Under IRS Publication 1: Your Rights As A Taxpayer, you are protected by a list of rights during an audit. These rights include:

• A Right to Professional and civil treatment by IRS employees
• A Right to your tax information remaining confidential and private
• A Right to know what, how, and why the IRS is using your information
• A Right to representation, by yourself or a sanctioned official
• A Right to appeal audit results, whether in the court or directly at the IRS

To be blunt, it just depends. Multiple factors apply, such as the audit type, how complex the issues are, how well your schedule matches the IRS, and whether you agree with the audit results.

Unless you are a non-profit organization, there is no “fast track” to getting around an audit; the only option you have is to be as proactive as possible with every step and make sure your bases are covered.

In 2025, IRS audits remain a central way for the agency to verify the accuracy of tax returns and ensure compliance with federal tax laws. While the overall purpose of audits has not changed, the IRS has placed greater emphasis on improving efficiency, reducing delays, and focusing on areas with the highest likelihood of errors or underreporting.

This year, the agency continues to direct more attention toward high-income taxpayers, business owners, and complex returns, particularly those involving partnerships and corporations. At the same time, individuals and small businesses can still be selected for review, often due to common issues like mismatched income reports, unusually large deductions, or eligibility for certain credits.

The IRS has also been working to make the audit process more streamlined and predictable. Initiatives include clearer timelines for examinations, more consistent communication with taxpayers, and options to resolve issues earlier in the process. Taxpayers may also see expanded use of secure online systems for submitting documents and tracking the progress of their audit.

The worst thing for a taxpayer with back taxes and unfiled taxes to do is nothing.

Even if you are not a small business owner, the IRS will still penalize you with liens, levies, or wage garnishments if you are not compliant.

Instead of burying your head in the sand when the IRS sends you a letter, seek representation from TaxRise. All taxpayers have the right to retain an authorized representative when dealing with the IRS – why not choose TaxRise?

With over 1,200 successful resolutions last year, TaxRise boasts a whole team of certified professionals with years of experience negotiating with the IRS.

If you are facing an audit, call one of our experts at 833-419-RISE (7473). They can guide you through the process and get you on the right track.