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IRS Audits Can be Successfully Fought!
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| Threat of an IRS Audit or State Tax
Audit can justifiably strike fear into the potential audit victim.
Business owners, professionals, corporations, partnerships and LLCs
have more complicated business transactions than most W-2 wage earners.
Fear of tax increases, tax penalties such as negligence penalties, late
filing penalties and late payment penalties as well as interest on the
tax increase and penalties, is real. Big increases in tax dollars owed
and even claims of civil tax fraud are the potential result of a
mishandled tax audit. |
| Not
a Simple Audit |
- Engage a tax attorney, in addition to
your accountant to represent you during the audit process.
- Defer all of the Auditor's questions to your
tax attorney and accountant.
- Gather your accounting records and all tax
returns for the years being audited
IRS auditors, known as Internal Revenue
Agents, and their criminal counter part, CID (Criminal Investigation
Division) agents have extensive training and education. Without the
assistance of a qualified tax lawyer before the audit even starts, a
taxpayer is starting behind the IRS professionals. The first step is
preparation and acquisition of tax law information. |
| General
Information Concerning Audits |
| You
are not going to jail!!!!! |
| Almost all tax audits are simply about
the various levels of government trying to get more money. Every year,
usually around the April 15 filing date, the IRS announces a vicious
prosecution against nationally (or locally) known high profile
individuals. This is part of the IRS enforcement technique to scare
taxpayers into "following the rules" imposed by the Treasury. But the
fact does not change that few taxpayers are indicted solely for tax
matters. An IRS Audit notice is for money not jail! |
| Do
Not Wait to See How the Audit "turns-out" to consult a tax lawyer!
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| Winning the audit requires the
taxpayer to prepare for the audit. Good preparation is more than simply
gathering the documents demanded. Identification of the tax law issues
and factual areas of contention require the experience and knowledge of
a tax attorney. Even if the return was prepared by a CPA or
professional accountant, the approach of the tax attorney is to
advocate for the taxpayer. Immediately, arrange for an initial
consultation to prepare for the audit. To understand the roles of
different tax professionals, click here |
| Types
of Audits |
There are three general types of IRS
Audits:
- Mail Audit
- Office Audit
- Field Audit
- Note: The IRS
is starting the Random Audit Program which requires the taxpayer to
produce a document for every item on the tax return. Click Here for more
details on this expensive program.
The Mail Audit is typically if there is a
discrepancy within the return (such as a calculation error) or with
third party information such as 1099's. Usually, these audits merely
require submitting backup information, documents, and an explanation.
Typically, this type of audit requires minimal assistance.
An Office Audit normally is for W-2 wage earners and some small
business owners. The taxpayer is required to bring substantiating
documentation for the return to the local IRS Office for analysis. The
Office Audit typically lasts 1 day or less. Frequently, taxpayers are
lulled into believing that the audit is "simple" and "straightforward"
and try to not have legal representation. This is how an unwary
taxpayer can fall into the traps of the IRS Revenue Agent. Immediately
upon receipt of an Office Audit Notice, the taxpayer should consult a
tax lawyer.
Field Audits, where one or more IRS Revenue Agents come to a taxpayer's
office are usually reserved for corporations, partnerships and limited
liability companies (LLC), although complex sole proprietorship are
also subject to field audits. The auditor has to go to the office of
the taxpayer because the documentation and legal issues are voluminous
and complex. The taxpayer should expect to obtain legal representation
as well as further accounting assistance to prepare for the audit.
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