Tax audits are typically conducted by government agencies responsible for collecting taxes, such as the Internal Revenue Service (IRS) in the United States or the HM Revenue and Customs (HMRC) in the United Kingdom. The tax authorities select taxpayers for audits based on various criteria, including random selection, discrepancies in tax returns, unusual deductions or credits, and other red flags that may indicate potential non-compliance.

During a tax audit, the taxpayer is required to provide documentation and evidence to support the information reported on their tax return. This may include receipts, invoices, bank statements, financial statements, and other relevant records. The audit process can vary in complexity and duration, depending on the taxpayer’s financial situation and the scope of the examination.