Things To Do If Your Tax Return Is Flagged For Review

If your tax return is flagged for review, you may be wondering what will happen next. What does this mean for you? Will you have to go through an audit? What are the consequences if your return is found to be incorrect? In this post, we will discuss what happens when your tax return is flagged for review and what you can do to prepare yourself.

How Tax Returns Are Selected For Review?

Each year, the IRS processes millions of tax returns and issues refunds to taxpayers. But not all returns are processed the same way. Some Returns are selected for review through a process called “examination.”

When a return is selected for examination, it means that the IRS will take a closer look at the information reported on the return. The IRS may examine a return for many reasons, such as:

  • To verify information reported on the return, such as income and deductions;
  • To ensure that the correct amount of tax was paid; or
  • To determine whether the taxpayer is complying with tax laws.

Returns can be selected for examination through several different methods. The most common method is a computer screening process called “Discriminant Function” (DIF). DIF scores individual tax returns using a mathematical formula that compares similar characteristics of “normal” returns with those of suspicious returns. Based on these comparisons, each return is given a score. The higher the score, the more likely it is that the return has errors or represents potential fraud.

Another way returns are selected for examination is through special projects. These projects focus on areas where there is a high risk of noncompliance, such as refund fraud or abuse of certain tax laws.

What Happens Once Your Return Is Flagged For Review?

If your tax return is selected for review, the IRS will send you a notice explaining why your return has been selected and what actions you need to take. The notice will also specify a date by which you need to respond. Depending on the reason your return was selected for review, you may be asked to provide additional information or documentation.

If your return is selected for an audit, you will be notified by mail and given instructions on how to proceed. An audit is a more in-depth examination of your tax return and usually involves a face-to-face meeting with an IRS agent. audits are conducted to verify information reported on the return and to ensure that the correct amount of tax was paid.

The IRS may also select your return for review if they believe you have failed to comply with tax laws. In this case, you will be notified by mail and allowed to respond. The IRS may conduct an audit or take other enforcement action if they find that you have not complied with tax laws.

What Should You Do If Your Return Is Flagged For Review?

If your return is selected for review, it is important to respond promptly and provide any requested information or documentation. Failure to do so may result in penalties or interest charges. If you disagree with the IRS’s decision to flag your return for a review, you can file an appeal.

If you are selected for an audit, it is important to cooperate with the IRS agent and provide any requested information or documentation. An audit can be a time-consuming and stressful process, but it is important to remember that you have rights as a taxpayer. If you are unsure of how to proceed, you can seek the advice of a tax professional.

Conclusion

No one wants to go through an audit, but if you’re selected for review by the IRS, don’t panic. By getting your income statements, receipts, and other tax-related documents organized during the review process, you can save yourself some time and headaches. The IRS may determine that your information is correct and process your refund. However, the government could verify your information and determine that you owe more in taxes, or worse, order a full-fledged audit. So take a deep breath and follow these tips – it will make dealing with the IRS a little less daunting.

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