Audit By IRS
Are you being audited by the IRS? Did you just receive a letter from the IRS?
If you are, then you are not alone. In fact, the IRS conducts millions of audits each year for various reasons. The IRS has several methods of deciding whom they are going to audit each tax year. If indeed you are one of those taxpayers selected for audit, please consider calling us or another tax professional today to discuss your
Why am I being audited by the IRS?
That is question a lot of folks would like the answer to. As we previously said, the IRS conducts millions of audits a year for various reasons. Now, you may be just a victim of a random audit, or you may have been selected because the IRS computers and/or the IRS examiners felt that your IRS tax return likely contains what they call “significant errors”.
What type of IRS audit is it?
Although the IRS has several different ways to audit an individual or business tax return, the three main types of audits used are correspondence audit, office or in-office audit, and field audit.
A good tax resolution specialist with IRS audit experience will consider several factors, and help you to create a game plan for your IRS audit.
Some of these factors may include:
If you don't feel comfortable representing yourself during an IRS audit, or are not well versed in the procedures, it is in your best interest to hire a tax professional to represent you. Once represented, you are not even required to be present during the audit. In fact, often times this can work in your favor. Another added benefit to having representation, is that if you disagree with some of the changes made by the auditor, or the outcome of the audit, your tax professional has the experience and know how to take your case to a higher authority within the IRS.
When faced with an IRS Audit, the one thing you never want to do is ignore the audit letter from the IRS! Failure to show up or comply with an audit, is a sure fire way to limit your options, create bad will with the IRS auditor, and increase your tax bill.
It is impossible to talk about IRS audits, without touching on penalties & interest. If the IRS determines that you underpaid your taxes, they will, at a minimum, make you pay the amount you would have owed. However, it rarely stops there…
In fact, if they do determine that you underpaid, then they will generally start adding the following:
Interestingly, the IRS has an entire chapter of the IRM, the Internal Revenue Manual devoted solely to penalties the IRS can charge you. The best way to minimize these penalties is to minimize the number of, and the amounts of the adjustments made by your auditor.
Also, just a quick note about the Statute of Limitations as it applies to IRS audits. Unless the IRS suspects tax fraud, they can only go back 3 years to audit any return you file (from the date you file). However, if the IRS does suspect tax fraud, or a gross understatement of your income, then they can go back up to 6 years.
All these factors and more need to be carefully examined and weighed when planning for an IRS audit. That is why we strongly consulting with a tax professional to represent you in the case of an IRS audit.
In fact, before any audit where we are representing a client, our in-house bookkeeping staff methodically goes through, and reorganizes all client financial records to build a complete and clear financial picture. Then our tax advisory staff uses those reports to check the current and previous tax returns in question for discrepancies and potential problems. By handling audits this way, we can identify and potentially head off problems before they arise!
If you are faced with an IRS Audit or IRS Examination, you should think very strongly about consulting with a tax professional today. To speak directly with a tax advisor at our firm, call us at (888) 918-8121. The call is free, the consultation is free, and you are under no obligation to hire us.