Affordable Tax Audit Specialists + We are an affordable local South Florida team of IRS tax experts, former IRS agents and managers, since 1982. A + Rated

We have 205 years of direct tax experience, 65 years of working for the local South Florida IRS offices as well in the district and regional offices.

We know the IRS system inside and out. We are available for second opinions as well.

We were former teaching instructors with the Internal Revenue Service. We worked both in audit and collection divisions. Since 1982, we have been representing people in the South Florida, Fort Lauderdale and Miami area.

What are the chances of an IRS Audit? Less than one percent, that’s it.

If you got an audit letter, you are very unlucky. And the chances are, there’s a very specific reason why you got in IRS audit letter.

At Fresh Start Tax LLC you will be represented by a CPA or former IRS agent who knows the system and can provide your very best tax audit defense.

If we cannot settle your case at the local office will take your case to the Appellate Division or settlements and the best deals are usually made.

We know this from our years of IRS experience.

It only makes sense to have Former IRS Agents and IRS Tax Audit Managers handle your IRS tax audit and give you the most experienced and successful expert IRS Tax Audit Help.

We can also tell you how to help audit proof your return in the future.

IRS audits are very predictable and after reviewing thousands of tax returns over the years we can tell you which cases are going to be subject for IRS tax audits.

Facts about IRS Tax Audits:

• The IRS audits a total of 1,391,581 tax returns a year.

• The IRS field agents complete more than 310,000 audits by office or business visits a year,

• The IRS completes over 1,081,152 correspondence audits a year. IRS collects a little over $5 million a year from his correspondence audits,

• IRS has installed new software tracking systems with the development of the CADE 2 computer to spot and recognize tax audits more proficiently,

• IRS employs over 13,000 IRS auditors.

• $5.2 billion dollars are collected through the IRS document matching program.

• For truly professional IRS Tax Audit help contact former IRS Agents and Managers.
The Secret Formula: How The IRS Picks Audits

The IRS uses a quantitative method called Discriminant Analysis to identify the ‘underreporters’ from the normal returns, driven largely by the following details.

• Schedule A Ratio: They’ll audit you if your schedule A (Itemized) deductions are more than 44% of your income.

• Schedule C Ratio: They’ll audit you if your ratio of schedule C (Business) deductions is more than 63% of income.

• Schedule F Ratio: They’ll audit you if your ratio of schedule F (Farm) deductions is more than 67% of income.

• Audits are 4x more likely if you own a business and 2x if you own a farm.

• The Obama administration has focused on high earners:

◦ Audits 5x more likely if your income is above $100,000.

◦ 20% chance of audit if you make $10+ million. (20x the average audit rate)

◦ 12% chance of audit if you make $5-10 million. (12x the average audit rate)

• Occupation affects your audit likelihood

◦ 22% of business and personal services companies are audited every year.

◦ 16% of building contractors are audited every year.
The IRS Tax Audit Examination Plan:

What you Need to Know about the IRS

The IRS audit plan that is used by the IRS is based on long-range coverage planning, and objectives on the resources requested in the Congressional Budget.

From this, there is an established plan where staff years are allocated to all area IRS offices using resource allocation and a prescribed methodology.

Each Area Manager of the IRS is responsible for preparing an area response following instructions from the National Headquarters.

Why the IRS Audits Tax Returns

Although there are a variety of reasons listed below some are the most common.

a. Front Loaded Programs

Front Loaded programs are those tax audits that IRS DC headquarters has determined are very important and a considerable amount of time must be spent on these programs and activities. Each area has discussions within management as to what the programs should be for each region, district, and office.
Some of the programs are:

• Special enforcement programs – An example of this may be compliance of all flee market vendors, a program I was involved with

• High Income non-filers – The IRS would get their information from a match program of w-2’s and 1099’s and match up social security numbers against filed returns

• Abusive Tax Avoidance – This could be in the area of offshore activities

• Offshore credit card program

• National Research programs – Those set forth by management after doing a trends project

• FBAR filing – IRS is currently targeting those with overseas bank accounts

• Non- filers – IRS is presently forming a task force to seek non-filers though aggressive means.

b. The IRS makes sure there is balanced coverage.

The National Office makes sure there is a balanced approach for audit return delivery and tax compliance. Resources and inventory and the size of personnel all go into this formula.

IRS focuses are blended into these areas:

1. Individual returns less than $100,000.

2. Individual returns greater than $100,000 but less than $200,000.

3. Individual returns greater than $ 200,000.

4. Small Business Corporations.

5. Small Business Flow-Through Entities – S Corporations, Fiduciaries and Partnerships.

c. Classification Plan

The IRS will prepare a plan, which is classified. A National DIF score indicator is placed on all Federal Income tax returns that are filed.

Each tax return has certain factors that contribute to its score such as Gross Income, Adjusted Gross Income and line item expense.

There are several classified secrets that go into the DIF score.

Each tax return is processed through the IRS computer line item by line item.
A DIF score label is placed on every tax return with its DIF number.

A tax examiner or Revenue Agent manually eyeballs each and every tax return with a high DIF score.

The examiner then determine which return has the highest probability of tax audit success.

d. DIF Cutoff Score, this is the most common reason for audit. each and every tax return has a DIF score, this stands for discriminatory index function.

The IRS will calculate the Area DIF cutoff score for each activity code, giving consideration to the selection rate.

This is the lowest DIF score necessary to secure the number of returns required for audit. For example, if the return plan shows 225 returns for an activity code and the selection rate is 70%, the IRS will need to order 321 returns (225/70%).

The DIF Cut off Score is 500. The number of returns with DIF scores greater than 550 is 280, which is less than the number of returns required, so the lowest DIF score on an ordered return will be in the range of 500 to 550 and the DIF cutoff score is 500.

All tax returns are graded by the Internal Revenue Service. That’s right, each and every tax return has a DIF score.

There is a label placed on the back of every tax return that grades audit potential.

Much of the audit numbers are predicated on the budget that Congress gives to the IRS.

Over the last couple years the number of audits are going down by small percentages simply because they do not have working staff to handle all the IRS audits that are truly needed. It is not wise to play the audit lottery.

Call us today for a free initial tax consultation and we will review your tax returns, go over best case scenarios and talk about your IRS tax defense for an IRS audit.

We are a full service tax firm. Since 1982, we have been serving South Florida.

IRS Tax Audit Help & Defense + Specialists, Former IRS + Appeals Experts & Settlements