What is a tax audit?

A tax audit is when the Internal Revenue Service (IRS) or the Virginia Department of Taxation (DOT) examines a person’s or business’s tax return to make sure the information is accurate and all required taxes have been reported and paid. During an audit, the taxpayer may be asked to provide documentation to prove the amounts reported on their tax return. Auditors can also look at other records and documents such as bank statements, investment records, and receipts. In Virginia, the DOT can conduct an audit of any Virginia taxpayer that has filed a return. Audits may be conducted by mail or in person. The purpose of a tax audit is to make sure taxpayers are paying the correct amount of taxes and that all the information reported is accurate. For example, the auditor may look to see if all deductions and exemptions are claimed correctly on the returns or if income is correctly reported. Audits can be very stressful and take considerable time to complete. If the auditor discovers any discrepancies or omissions, the taxpayer will be required to pay the taxes due, interest, and possibly penalties. The DOT may also impose criminal penalties if it is determined that the taxpayer willingly tried to avoid paying taxes. It is important to understand the rules of taxation and to always be honest when filing a return.

Related FAQs

What is the tax rate for my income?
What is a tax return estimate?
How do I determine my filing status?
What is the tax rate for Social Security benefits?
What is a tax lien?
Are there any limits on the deductions I can take?
What deductions can I take?
What is the difference between standard and itemized deductions?
Are Social Security benefits taxable?
What is the difference between federal and state income tax?

What is a tax audit?

Related FAQs

Related Blog Posts