🧐 IRS Audit Examination Process — CPA Exam (REG) | Taxation Course

Why It Matters

Understanding the IRS audit process equips tax professionals and taxpayers with the procedural safeguards needed to protect their rights, reduce audit risk, and effectively manage potential adjustments or appeals.

Key Takeaways

• IRS may conduct audits at office, business, or third‑party locations.
• Taxpayers can pause an audit to obtain qualified representation.
• Revenue Agent Report finalizes findings and outlines any tax adjustments.
• IRS must give advance notice before contacting third parties, except criminal investigations.
• Audit reconsideration requires new information; repeat audits are generally prohibited.

Summary

The video walks viewers through the IRS audit examination process, covering where audits can be held, the taxpayer’s right to representation, the issuance of the Revenue Agent Report, and the rules governing third‑party contacts, reconsideration, and repeat examinations. It explains that an audit may occur at an IRS office, the taxpayer’s place of business, or another appropriate site, and that the examiner must pause the examination if the taxpayer requests a qualified representative, allowing time to file Form 2848. Key insights include the procedural steps that lead to the Revenue Agent Report (R‑Report), which summarizes findings and any proposed adjustments, and the requirement that the IRS provide advance notice before contacting third parties—except in criminal investigations. The video also clarifies the possible audit outcomes: no change, agreement, or disagreement, and outlines the limited circumstances under which a taxpayer may seek audit reconsideration by presenting new information. Notable examples illustrate that the examiner must suspend the audit when representation is requested, that the R‑Report marks the transition from examination to resolution, and that repeat examinations are discouraged unless new issues arise. The presenter emphasizes the importance of understanding these rights and procedural safeguards, especially for CPA and EA candidates. For practitioners and taxpayers, mastering these rules helps protect rights, streamline audit resolution, and avoid unnecessary repeat examinations. It also underscores the strategic value of qualified representation and timely, accurate documentation when navigating IRS audits.

Original Description

This video lecture provides a step-by-step breakdown of how the IRS selects and examines tax returns. 🏛️ We explore the selection criteria—from DIF scores to information matching—and the different types of audits you need to know, including Correspondence, Office, and Field examinations. 📉 Understanding the taxpayer's rights and the potential outcomes of an audit is essential for the CPA REG exam and for anyone representing clients before the IRS. 🎯

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