What Is the Internal Revenue Service (IRS)? How Auditing Works

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Definition of 'What Is the Internal Revenue Service (IRS)? How Auditing Works'

The Internal Revenue Service (IRS) is the federal agency responsible for collecting taxes in the United States. The IRS is a bureau of the Department of the Treasury, and its mission is to "provide America's taxpayers with top quality service by helping them understand and meet their tax responsibilities and enforce the law with integrity and fairness."

The IRS is responsible for a wide range of tax-related activities, including:

* Collecting taxes from individuals and businesses
* Enforcing tax laws
* Providing taxpayer education and assistance
* Administering tax programs

The IRS is also responsible for auditing taxpayers. An audit is a review of a taxpayer's tax return to ensure that it is accurate and complete. If the IRS finds that a taxpayer has underpaid their taxes, they may assess additional taxes, penalties, and interest.

The IRS has a number of different audit programs, each of which targets a specific type of taxpayer or tax return. For example, the IRS may conduct a random audit, a compliance check, or a criminal investigation.

If you are selected for an audit, the IRS will send you a letter notifying you of the audit. The letter will provide information about the type of audit, the documents that you need to provide, and the deadline for submitting your response.

You should carefully review the letter and the enclosed documents. If you have any questions, you should contact the IRS auditor assigned to your case.

The IRS audit process can be stressful, but it is important to remember that you have rights. You are entitled to represent yourself during an audit, or you can hire a tax professional to represent you. You also have the right to appeal any IRS decision.

If you are audited, it is important to cooperate with the IRS. Provide the requested documents and information in a timely manner. Be honest and responsive to all questions. If you disagree with the IRS's findings, you should submit a written protest.

The IRS audit process can take several months or even years to complete. However, if you cooperate with the IRS and follow the rules, you can minimize the chances of having your taxes increased.

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