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While ?high-dollar compliance issues? are the IRS' primary target, lower income individuals should still be aware. The IRS has pledged not to increase audit rates on those earning less than $400,000 a year, though the overall number of audits on these individuals seems likely to rise.
Three Types of IRS Audits: Correspondence, Office, Field.
The cost of an audit can be high Audits are likely to be costly. IRS data shows that over 90 percent of individual audits result in a tax change. The average additional tax owed is $6,014 for a mail audit and $21,918 for a more intrusive IRS field audit.
Audits are expensive, requiring a certified public accountant (CPA) to systemically inspect each financial document and empirically test financial details.
More specifically, the statute of limitations is three years from the day the tax return was due or filed (whichever is later). So if we're in the middle of 2023 and you submitted your 2022 return by the tax deadline, the IRS can lawfully examine your returns for 2022, 2021, and 2020 as part of their tax audit.