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What types of audits could I face?
There are basically two types of audits: correspondence and field. Correspondence audits are simply mailed letters that the IRS sends to taxpayers requesting more information, adjusting tax returns, etc. Of the 1,564,690 examinations performed for fiscal year 2011 (involving 2010 tax returns), 75% were handled by correspondence (mail).
The other audit is in the field, or face to face interview which makes up the remaining 25% of all audits. The interview can take place in a variety of places- your local IRS office, your accountant’s office, your home or your place of business. Sorry, Starbuck’s and remote desert areas in Nevada are not acceptable audit location. To keep the audit out of your business office, you must demonstrate that it would be disruptive to your operation.