No. If the examiner finds discrepancies in the deductions compared to the proof you supply then she can request further documentation, but she cannot go beyond the scope of the original examination letter without notifying you in writing and must have cause to do so.

Income is reported on tax forms such as W-2 forms (for salaried employees) and 1099 forms (for independent contractors). Interest income you received and mortgage interest you paid is also reported to the IRS, as well as money you received when selling stocks or bonds. The examiner will compare the reported income from these sources with the income reported on your tax return.

The IRS allows reconstruction of your income and expenses based on economic realty (income you reasonably would have made and reasonable expenses you would have had to support yourself and/or family) and on "Industry Standard".

For example, If you are a self-employed plumber they have statistics on the average income and expenses for self employed plumbers and will use those statistics as a guide.

The examiner will first try to find any hidden income. This is a standard action all examiners do regardless of the specific items being examined. We will know how to prepare you for this step.

After an income analysis, the auditor will examine the specific items in question. She will add up your receipts for the item and ensure those specific deductions were not overstated.

The letter from the IRS will outline the specific items on your tax return that they will examine. In all examinations, the examiner will want to see fourteen months bank statements and canceled checks. The examiner will also want to examine any records, receipts and credit card or loan statements relating to the specific areas being examined.