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What is a Field Audit?

Jim B.
Jim B.

A field audit is an audit of tax returns by an agent of the Internal Revenue Service, or IRS, in the United States that takes place at the residence or place of business of the individual or business being audited. This is often required by the IRS when correspondence between the parties is not adequate to solve the problem. Those who are the subject of a field audit may have their hired tax professional intercede on their behalf. IRS officials require that all necessary records be provided so they can see if any additional chargers are warranted outside the scope of the audited party's initial tax return.

There are many different types of audits that the IRS may perform if there is some sort of discrepancy or problem with a specific tax return. If the problem is small or the amount in question isn't significant, these audits usually take place through the mail via letters to the parties involved. The audited party can then make the necessary corrections or prepare a response to the audit. In larger cases, a field audit, which takes place at the actual site of the business in question, may be performed.

Detailed inquiries will also be made of the audited parties to determine if there is any necessary information being left out of the prepared return.
Detailed inquiries will also be made of the audited parties to determine if there is any necessary information being left out of the prepared return.

While there are no set guidelines that the IRS uses to determine what kind of tax returns demand a field audit, a field audit generally occurs when the agency needs to actually interact with the party involved. This is because the IRS may actually need to investigate the business and its operations firsthand. The IRS will contact the business or individual being audited and set up an appointment to interview the principals and to collect the necessary business records.

A field audit is often necessary when a correspondence between the IRS and taxpayer is not adequate to solve the problem.
A field audit is often necessary when a correspondence between the IRS and taxpayer is not adequate to solve the problem.

An investigator chosen to conduct a field audit is one who is skilled at both ferreting out illegal tax practices and negotiating settlements with those who may be delinquent on their payments. He can do this by visiting the place of business and seeing firsthand how daily operations are conducted. Detailed inquiries will also be made of the audited parties to determine if there is any necessary information being left out of the prepared return.

A field auditor may travel to the site of a car accident to determine the validity of an insurance claim.
A field auditor may travel to the site of a car accident to determine the validity of an insurance claim.

The audited party in a field audit is allowed to have representation, which is usually a member of the accounting firm who prepared the tax return in the first place. This representative acts as a buffer between the audited party and the IRS, handling all questions and presenting the company's side of the story. In addition, the representative may attempt to move the meeting away from the company's place of business, to either an IRS office or to the representative's firm.

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    • Detailed inquiries will also be made of the audited parties to determine if there is any necessary information being left out of the prepared return.
      By: Kirill Kedrinski
      Detailed inquiries will also be made of the audited parties to determine if there is any necessary information being left out of the prepared return.
    • A field audit is often necessary when a correspondence between the IRS and taxpayer is not adequate to solve the problem.
      By: Aaron Chen
      A field audit is often necessary when a correspondence between the IRS and taxpayer is not adequate to solve the problem.
    • A field auditor may travel to the site of a car accident to determine the validity of an insurance claim.
      By: Vuk Vukmirovic
      A field auditor may travel to the site of a car accident to determine the validity of an insurance claim.
    • There are no set guidelines that the IRS uses to determine what kind of tax returns demand a field audit.
      By: Arto
      There are no set guidelines that the IRS uses to determine what kind of tax returns demand a field audit.