Each year, more than 140 million tax returns are filed with the Internal Revenue Service (IRS). Of these 140 million returns, nearly 1.5 million are audited by the IRS. Taxpayers with adjusted gross income above $200,000 are generally more likely to be audited, and taxpayers will have little or no adjusted gross income. Although the likelihood of actually being selected for an audit is relatively low, it is still important for taxpayers to understand what the tax audit involves, the procedures the IRS follows in determining which tax returns to audit, and the process of the IRS to select the audit result. audit. This way, taxpayers are able to point out common IRS red flags and can significantly minimize the possibility of being singled out for a tax audit. A tax audit is an examination of a tax return by the IRS to verify information, such as income. and deductions, are reported accurately. Typically, the IRS evaluates the financial situation of a business or individual to ensure that taxpayers are following tax laws and reporting the correct amount of tax on their tax return. The IRS follows the tax audit process by selecting tax returns to audit, performing the audit, and determining the audit's conclusion. The IRS uses a variety of audit selection methods, including random selection and computer selection, document matching, and associated reviews. to determine which tax returns are selected. Random selection and computer selection involve selecting returns based on a statistical formula. This method demonstrates that some results are simply chosen at random, even if no error has actually occurred. Document matching is a process used to ensure that documents filed by taxpayers, such as W-2...... middle of paper ......documentation to support one's business expenses, not resulting in no change in his tax return. This example once again demonstrates that even though a tax return may contain some minor errors, providing solid documentation can greatly benefit the taxpayer in the event of an audit. A tax audit can be a long and arduous process for both the IRS and the taxpayer. If the taxpayer is familiar with the methods and procedures of the tax audit process and is prepared to receive notification, the process can be less alarming and less stressful. Being aware of the many indicators the IRS looks for during the audit can significantly reduce the chances of being audited, while still maintaining relevant documents, statements and records. The tax audit not only verifies the correct reporting of information on the tax return, but also helps the IRS ensure the fair treatment of all taxpayers..