Tax Audits

A tax audit is the process by which a company's financial documents are reviewed in order to make sure that they are in compliance with all applicable tax laws with regard to their business. The main thing that is looked for in a company tax audit it to make sure that the proper amount of sales taxes has been collected. An individual taxpayer may also be subject to a tax audit as well. When a taxpayer is subjected to a tax audit, the taxpayer's tax return is reviewed, and if needed, the taxpayer must provide the Internal Revenue Service with any documentation they may require in order to prove that the information on the tax return is correct.

Fast Facts

  • There were 1.66 million individual taxpayers audited in 1997.
  • Most people are randomly picked for a tax audit, and there are no underlying reasons for the audit.

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