IRS Audit Representation
IRS Tax Audits can be extremely stressful for even the most business-savvy professionals, but in fact, a significant percentage of taxpaying citizens have experience of being audited at some point in their lives. They are often complicated and time-consuming, distracting you from your everyday obligations. You must be prepared to explain the nature of your income and offer substantiation for your expenses and deductions. It can be a very overwhelming process. By allowing Allied Tax Advisory Group to help solve your Tax Controversy, you save yourself the hassle of handling it alone. Knowing what to expect, and how to respond can make things a lot easier.
Here are some of the most common questions and answers about IRS audits.:
I have received a letter from the IRS telling me that my tax return for the previous year is being examined.
The IRS has not singled you out, this is processed through a complex system where the IRS looks for particular items in returns. The system looks for statistical analysis to indicate a higher than average chance of tax understatement. The computer program gives a numeric “score” using the Discriminant Function System (DIF). IRS personnel use the highest scoring returns, then selecting some for audit. Some key factors leading to potential IRS Audit include returns showing large gross, and those having Schedule C’s (sole proprietorship’s). This is based on the number of deductions claimed in relation to gross business income.
Taxpayers who fail to report all income or report improperly, or omit required W-2’s or other return schedules are likely to attract attention.
My notice says I am to appear for an appointment at the IRS offices.
Although some examinations are conducted only by mail, others require a personal appearance. The best approach is to promptly cooperate from the outset, bring all necessary items and records that are specifically referred to in the notice letter. Don’t risk opening issues by volunteering information that is not requested.
Should I take an Enrolled Agent or CPA with me?
You have every right to be represented during an audit. An experienced and knowledgeable tax professional can be consulted and may be able to look at your return and tell you what items or schedules are likely to draw the agent’s attention. This may be beneficial for you to prepare, and also help you decide whether you want an ongoing representation during the audit process.
If I agree with the amount proposed by the tax examiner, when and how will I have to pay it?
It will take the IRS Service Center anywhere from three to eight weeks to process, asses the tax, and send you the final bill. Interest stops for 21 days after the bill is issued, if it is paid within that time there is no additional interest.
If I cannot afford to pay the taxes, what are my options?
Since these unexpected tax deficiencies usually are not budged for, you can speak with the examiner. You can make an Installment Payment Agreement or an Offer in Compromise.
Having us on your side offers not only reassurance but the potential for a substantial difference in the outcome of your Federal or State Tax Controversy. We will assist you at all stages of a Tax Audit, whether it occurs by mail or as an in-person interview. Our goal is to achieve the most favorable results for our clients through the most efficient means. By working closely with our clients, we develop an Audit Strategy keeping in mind our client’s desired result. If you are being audited, contact Allied Tax Advisory Group so that we can help ensure the best possible outcome.
What are my rights during an IRS Audit?
It is very important to know your rights under an IRS Audit to be able to defend yourself to the fullest. The IRS outlines these rights on their official website, this includes:
- The right for an explanation as to why the IRS is requesting information, how they intend on using the information, what will occur if you do not provide this information.