Q&A of the Week March 17, 2021

Answer:

An IRS audit may be conducted when there is a difference between what the IRS is owed and what is received. It can be random but is usually based on suspicious activity. For 2019, 0.15% of tax returns were audited.

An IRS inquiry occurs within 3 years of when a tax return is reported when there is a flagged issue that does not warrant an official audit. For example, there may be an income-reporting discrepancy or proposed additional tax due.

Warning: once the IRS looks at one part of a tax return, the rest is fair game.