Most people dread IRS audits even when they are not guilty of a tax offense. After all, the IRS would rarely audit you if there is no suspicion of foul play when filing taxes. For those being audited by the IRS, it is prudent to get a tax controversy attorney or a qualified CPA. Before this, however, it is also crucial for you to understand the different types of audits and the reasons behind them. You may or may not have come across those three statements (eggshell audit, criminal investigation, and criminal prosecution) as a taxpayer. Either way the purpose of this article is enlighten you further on their differences as well as their correlation to each other.
So, What Is An Eggshell Audit?
An eggshell audit is a civil examination conducted by the IRS in situations where the taxpayer’s returns contain information that show sufficient indications of fraud. These issues include; an understatement on the record information pertaining to a taxpayer’s income, or an overstatement of the taxpayer’s credits or deductions which he or she was otherwise not entitled to. Both of these situations, though unique to each other, all conclude to a tax liability recorded by the taxpayer that is less than what is actually owed to the IRS. This would be against the fundamental requirement by the IRS to file accurate and correct returns.