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Most audits are by mail

By Kay Bell · Bankrate.com
Tuesday, April 5, 2011
Posted: 2 pm ET

A lot of folks fear tax filing time because they're afraid they'll end up answering questions from the Internal Revenue Service.

Yes, tax audits -- or examinations as the IRS likes to call them, are real. But they're not a problem for most of us.

The IRS 2010 Data Book says that in the last fiscal year it examined just 1.6 million of the 142 million returns it received. That's just an audit rate of 1.1 percent.

Even better, most of those audits were done by mail. Of total audits last fiscal year, 78 percent were done by mail.

These so-called correspondence audits range from the very simple notification that the IRS found a mistake in a taxpayer's math to requests for additional documentation and further explanation for a deduction or tax credit claim.

The IRS likes correspondence audits because they're much cheaper than full-fledged field audits where taxpayers and IRS agents go head to head over tax return questions.

And while taxpayers don't like correspondence audits -- nobody ever likes any IRS questions -- they are preferable to schlepping all your tax material to an IRS meeting.

Remember, the best protection against IRS questions is to not raise any audit red flags.

But if you are asked about your return, don't panic. Just prepare for the audit, with your first step being to hire a tax pro to argue your case if you didn't use one when you filed in the first place.

You can help avoid audit and other tax troubles by getting all the latest tax news and tips this filing season by subscribing to Bankrate's free Daily Tax Tip newsletter.

You also can follow me on Twitter @taxtweet.

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