by Fresh Start Tax | Jan 17, 2014 | IRS Tax Audit, Tax Help
The affordable, experienced and trustworthy tax audit solution.
Use former local IRS Agents who understand the audit techniques. We taught Tax Law at the local IRS offices.
If you are facing an IRS audit and need affordable/professional IRS audit representation, call us today for a free initial consultation and you will find out why we are used by hundreds of taxpayers in the South Florida area.
We have been practicing tax representation in South Florida since 1982 and we are A+ rated by the Better Business Bureau.
On our staff are tax attorneys, certified public accountants, and former IRS agents.
Most importantly, on staff are former IRS auditors, former IRS revenue agents and former IRS appellate agents who have worked both sides of the fence both working as IRS auditors and in private practice representing and offering the best IRS audit defense possible.
We can give you a real look at how IRS will audit your return and we will usually be able to reduce the risk of additional tax and penalties.
Why did the IRS Select your tax return for a Tax Audit
- Random Sample : The percentage of random audits is very low about 1%. These are very difficult tax audits because the IRS audits everything on the return to set up tax audit norms and DIF scores.
- Computer Scoring: All tax returns are scored by the Discriminant Function System (DIF). Each return is graded by IRS agents that are sent to service centers to review returns that have potential IRS audit revenues that could be collected.Basically the IRS establishes a norm, and checks to see if your tax returns fit the norm. The system also rates the potential for adjustments based on historical data and past IRS experience. About 90% of all tax returns are audited because of risk or potential. In our office are former IRS agents who used a grade tax returns at service centers.
- Self Employed or Small Business Losses: The IRS despises small business losses, and hates hobbies even more. If you are showing a hobby loss on your tax return there is extremely good chance you’re asking IRS to say please come out and audit me. These type businesses are usually red flags for IRS audits. Keep in mind many taxpayers are honest but the majority of people who tend the fudge on their tax returns are found in the area of self-employed and small business.
- High Tax Deductions: If your deductions such as mortgage interest or charitable contributions are outside the average for your income range, you could trigger an IRS audit. If your deduction is legitimate do not be afraid to take the deduction. Many times we recommend photocopying the check and the bill and attaching it to your tax return.
- Home Office Deduction: IRS Tax Audits based on home offices are looked at closely to make sure taxpayers are not abusing income tax law. You should check with a true tax professional before taking the office in the home deduction and find out what the general acceptance standards are.
- Meals, Entertainment and Travel: These expenses have commonly been abused by past taxpayers, and the IRS has historical data showing the averages as compared to income depending on your profession. Keep very detailed records if you are claiming these deductions.
- Information Matching: Most all W2’s and 1099’s are electronically transmitted to the IRS. If your tax return is missing a W2 or 1099, or if the amount you report is different than the amount the IRS has in their database, your tax return will be adjusted or audited. You will generally receive an audit notice about 2 years after the mismatch. The Internal Revenue Service collects over $10 billion on these mismatch programs.
- Related Examination: If your business partner’s individual tax return is examined and a particular issue or transaction is discovered, your tax return might be examined as well. This is not limited to business partnerships. It also includes any transaction or agreement between you and another taxpayer that causes a taxable event on two different tax returns might flag you if one tax return shows a discrepancy. It is also very possible that if a former spouse is audited that your tax return may be picked up as well.
- Abusive Tax Avoidance Transactions: Certain promoters and participants involved in abusive tax avoidance transactions have found themselves in trouble. From there, the courts and other enforcement agencies have provided lists of names based on credit card data, summons and other testimony to allow the IRS to follow up. So you might simply be guilty by association.Also IRS is hot on the trial of all non filers of FBAR.
- Large Corporations: The IRS examines many large corporate tax returns on an annual basis. Percentages jump to 10% of all corporate tax returns are audited.
- Other: Field IRS offices in conjunction with local agencies identify certain tax returns for examination based on local compliance initiatives, tax return preparers or specific market segments.
Facing IRS Audit, IRS Audit Representation – Affordable Former IRS, Riveria, Jupiter, Greenacres
by Fresh Start Tax | Jan 16, 2014 | Tax Help
Being a former IRS agent and teaching instructor I cannot tell you the amount of times that IRS has filed federal tax liens, federal tax levies unwarranted seizures of assets belonging to taxpayers.
Many taxpayers do not realize that you can appeal almost all IRS decisions if they are done on a timely matter.
Taxpayers can appeal decisions for the filing of the federal tax liens, for the filing of bank levies and wage garnishment notices or any seizure activity the IRS can take.
Below you can find the procedures to go ahead and appeal any of the IRS collection actions.
They must be done on a timely basis or you lose your appellate rights
If you have any questions you can contact us today we have over 60 years of direct IRS work experience
Appeals / Protests
A formal written protest is required in all cases to request an Appeals conference, unless you qualify for the Small Case Request procedure discussed below or another special appeal procedure.
Note:
If you disagree with a lien, levy, seizure, or denial or termination of an installment agreement, see Publication 1660, Collection Appeal Rights, for information on filing your protest.
How to file a Formal Written Protest
Include all of the following:
- Your name, address, and a daytime telephone number.
- A statement that you want to appeal the IRS findings to the Office of Appeals.
- A copy of the letter you received that shows the proposed change(s).
- The tax period(s) or year(s) involved.
- A list of each proposed item with which you disagree.
- The reason(s) you disagree with each item.
- The facts that support your position on each item.
- The law or authority, if any, that supports your position on each item.
The penalties of perjury statement as follows: “Under the penalties of perjury, I declare that the facts stated in this protest and any accompanying documents are true, correct, and complete to the best of my knowledge and belief.”
Your signature under the penalties of perjury statement.
If your representative prepares and signs the protest for you, he or she must substitute a declaration for the penalties of perjury statement that includes:
That he or she submitted the protest and any accompanying documents, and
Whether he or she knows personally that the facts stated in the protest and any accompanying documents are true and correct.
You must send your formal written protest within the time limit specified in the letter that offers you the right to appeal the proposed changes. Generally, the time limit is 30 days from the date of the letter.
How to file a Small Case Request, Appeal, Protest
You may submit a Small Case Request if the entire amount of additional tax and penalty proposed for each tax period is $25,000 or less.
For an offer in compromise, the entire amount for each tax period includes total unpaid tax, penalty and interest due.
Note:
Employee plan, exempt organizations, S corporations and partnerships are not eligible for Small Case Requests.
Follow the instructions in the letter you received.
Use Form 12203, Request for Appeals Review, or the form referenced in the letter to file your appeal, or prepare a brief written statement.
List the disagreed item(s) and the reason(s) you disagree.
IRS File a Tax Lien, Tax Levy, Seizure – Appeal the IRS Collection Action, Former IRS – Miami, Ft.Lauderdale, Palm Beaches
by Fresh Start Tax | Jan 16, 2014 | Tax Help
I was a Former IRS Agent and teaching instructor with the IRS.I know the IRS systems.
I also taught and worked the offer in compromise program when I was with the Internal Revenue Service.
You should call us today for immediate tax consultation. We will let you know up front whether it’s worth it to file an appeal and what your chances of success would be.
If the Internal Revenue Service has rejected your offer in compromise you should immediately file an appeal.
The IRS loves to reject offers in compromise because the sheer amount of work it takes to process your offer in compromise up and through the ranks plus the fact that all accepted offers in compromise are a matter of public record for one year at the district offices.
The average work time for offer in compromise is at least 20 hours by an IRS agent, revenue officer.
With this said you should make sure that you have valid reasons for going to appeals.
IRS has very strict standards of offers in compromise acceptance and you should go and talk to a true tax professional who understands the formulas and criteria is to get offers in compromise accepted.
The Process – Preparing a Request for Appeals
If you disagree with the IRS’s collection division determination, you may request an Appeals conference by filing a written protest.
You may represent yourself, or have a professional represent you.
The representative must be an attorney, a certified public accountant, or an enrolled agent authorized to practice before the IRS.
If you want your representative to talk to us without you, you must provide us with a copy of a completed power of attorney Form 2848, Power of Attorney and Declaration of Representative.
To decide if you should appeal your tax dispute, consider the following:
- If you believe the IRS made an incorrect decision based on a misinterpretation of the law, check the publications discussing your issue(s), or refer to Tax Topics.
- If you believe the IRS did not properly apply the law due to a misunderstanding of the facts, be prepared to clarify and support your position.
- If you believe the IRS is taking inappropriate collection action against you, or your offer in compromise was denied and you disagree with that decision, be prepared to clarify and support your position.
- If you believe the facts used by the IRS are incorrect, then you should have records or other evidence to support your position.
How to file a Formal Written Protest
Include all of the following in the protest:
1. Your name, address, and a daytime telephone number.
2. A statement that you want to appeal the IRS findings to the Office of Appeals.
3. A copy of the letter you received that shows the proposed change(s).
4. The tax period(s) or year(s) involved.
5. A list of each proposed item with which you disagree.
6. The reason(s) you disagree with each item.
7. The facts that support your position on each item.
8. The law or authority, if any, that supports your position on each item.
The penalties of perjury statement as follows: “Under the penalties of perjury, I declare that the facts stated in this protest and any accompanying documents are true, correct, and complete to the best of my knowledge and belief.”
Your signature under the penalties of perjury statement.
If your tax representative prepares and signs the protest for you, he or she must substitute a declaration for the penalties of perjury statement that includes:
That he or she submitted the protest and any accompanying documents, and
Whether he or she knows personally that the facts stated in the protest and any accompanying documents are true and correct.
You must send your formal written protest within the time limit specified in the letter that offers you the right to appeal the proposed changes.
Generally, the time limit is 30 days from the date of the letter. If you are returning the appeal back by mail always send it to the Internal Revenue Service by registered receipt. more than one time it is happen to us that IRS’s claim they never received the documentation make sure this does not happen to you.
How to file a Small Case Request OIC
You may submit a Small Case Request if the entire amount of additional tax and penalty proposed for each tax period is $25,000 or less.
For an offer in compromise OIC , the entire amount for each tax period includes total unpaid tax, penalty and interest due.
Special Note: Employee plan, exempt organizations, S corporations and partnerships are not eligible for Small Case Requests.
Always , Follow the instructions in the letter you received.
Use Form 12203, Request for Appeals Review, or the form referenced in the letter to file your appeal, or prepare a brief written statement. List the disagreed item(s) and the reason(s) you disagree.
It is both wise and diligent to use tax professionals on large dollar cases.
Being a former IRS agent and teaching instructor taxpayers really have no clue on how to get there offer in compromise through the Internal Revenue Service.
IRS Rejected Offer in Compromise – Here is what to do – Appeal
by Fresh Start Tax | Jan 15, 2014 | IRS Tax Audit, Tax Help
IRS Audit Defense, IRS Audit Representation, Former IRS
We are the Affordable Local Tax Firm.
Our Staff
We are comprised of tax attorneys, certified public accountants and former IRS agents. We’ve been practicing in South Florida since 1982 in our A+ rated by the Better Business Bureau.
Our firm has over 206 years of professional tax experience right here in South Florida.
Why use Fresh Start Tax LLC
Besides our affordability we have been former IRS agents, IRS managers, and IRS instructors who taught tax law at the Internal Revenue Service.
We have audited and represented both hundreds of taxpayers, businesses and corporations who have undergone IRS tax audits.
We know IRS audit defense from both sides of the fence.
We know things IRS is looking for and we understand what your best defenses.
Our experience, affordability, A plus BBB rating qualifies us to be one of the most trustworthy local tax firms in the area.
Come by and see us for a free initial tax consultation
What is a IRS Audit – Do not be worried of Panic
An IRS audit is a review or tax examination of an organization’s or individual’s accounts and financial information to ensure information is being reported correctly, according to the tax laws, to verify the amount of tax reported is accurate.
IRS Tax Publication 556, Examination of Returns, Appeal Rights and Claims for Refund explains the audit process in more detail. You can find that on line.
The IRS Tax Audit Selection Process
Selecting a tax return for IRS audit does not always suggest that an error has been made on the tax return.
Tax Returns are selected using a variety of methods, including:
1. Potential participants in abusive tax avoidance transactions.
Some returns are selected based on information obtained by the IRS through efforts to identify promoters and participants of abusive tax avoidance transactions. Examples include information received from “John Doe” summonses issued to credit card companies and businesses and participant lists from promoters ordered by the courts to be turned over to the IRS.
2. Random selection and computer screening – sometimes returns are selected based solely on a statistical formula. Each tax return receives a DIF score.
What’s the DIF and how does it apply to you?
The IRS says there are several ways a return can be selected for audit and the first is via the agency’s computer-scoring system known as Discriminant Information Function, or DIF.
The good old IRS evaluates tax returns based on IRS formulas, and DIF is based on deductions, credits and exemptions with norms for taxpayers in each of the income brackets.
The actual computer scoring formula to determine which tax returns are most likely to be in error is a closely guarded secret and only known by a select few.These are the types that would have to kill you than give up the info.
Experts believe one discriminant information function component looks at average deduction amounts.
This allows IRS examiners to spot inconsistencies, such as a high mortgage interest deduction and low income.
So what is likely to trigger a discriminant information function red flag?
1. Higher incomes.
2. Income other than basic wages; for example, contract payments.
3. Unreported income, such as investment returns.
4. Home-based businesses, especially when in addition to salary income, and home-office deductions.
5. Non-cash charitable deductions.
6. Large business meal and entertainment deductions.
7. Excessive business auto usage.
8. Losses from an activity that could be viewed as a hobby rather than a business.
9. Large casualty losses.
3. Document matching – when payor records, such as Forms W-2 or Form 1099, don’t match the information reported.This accounts for over $10 B a year for Uncle Sam.
4. Related examinations – returns may be selected for audit when they involve issues or transactions with other taxpayers, such as business partners or investors, whose returns were selected for audit.
IRS Audit Stats
The Internal Revenue Service collects $10.2 billion a year from IRS audits.
IRS collects $4.2 billion a year from IRS audit appeals.
IRS collects $5.2 billion a year on the document matching program.
There are over 13,000 IRS audit agents.
There are over 359,000 field and office audits every year
1% of all tax returns are audited by the Internal Revenue Service.
IRS Tax Audit Methods
An audit may be conducted by mail or through an in-person interview and review of the taxpayer’s records.
The interview may be at an IRS office (office audit) or at the taxpayer’s home, place of business, or accountant’s office (field audit).
The IRS will tell you what records are needed. Audits can result in no changes or changes. Any proposed changes to your return will be explained.
IRS Tax Audit Notification
Should your account be selected for audit, you will be notified in two ways and only two ways:
1. mail, or
2. telephone
In the case of a telephone contact, the IRS will still send a letter confirming the audit.
Important Note – E-mail notification is not used by the IRS.
Your Tax Rights During an Audit, your Bill of Rights
Publication 1, Your Rights as a Taxpayer, explains your rights as a taxpayer as well as the examination, appeal, collection, and refund processes.
These tax rights include:
A right to professional and courteous treatment by IRS employees.well, kind of courtesy
A right to privacy and confidentiality about tax matters.
A right to know why the IRS is asking for information, how the IRS will use it and what will happen if the requested information is not provided.
A right to representation, by oneself or an authorized representative.
A right to appeal disagreements, both within the IRS and before the courts.
What Happens When You DISAGREE with the IRS Tax Audit Findings?
A conference with a manager may be requested for further review of the issue or issues. In addition, Fast Track Mediation or an Appeal request may be filed.
IRS Audit Defense, IRS Audit Representation, Former IRS , Boynton, Delray, Lake Worth, West Palm Beach
by Fresh Start Tax | Jan 15, 2014 | Tax Help
HAVE AFFORDABLE FORMER IRS AGENTS, MANAGERS GIVE YOU THE IRS AUDIT PROTECTION YOU NEED.
We know the system.
We are a local South Florida tax firm that has been representing taxpayers in South Florida since 1982.
On staff are Former IRS Auditors, Audit Managers and Audit Instructors.
We are A+ rated by the Better Business Bureau.
We are a team of tax attorneys, certified public accountants, and former IRS agents and managers who worked right here out of the local South Florida IRS offices.
We have a cumulative 206 years of professional tax experience in over 60 years of working right here in the South Florida IRS offices.
Being Former IRS Agents and Managers we can tell you, it is not in your best interest to represent yourself during a IRS audit and we should know.
When an IRS agent finds a taxpayer by themselves in a tax audit they pretty much can do whatever they feel because after all they are the law.
Most taxpayers do not know that they have rights during an IRS tax audit and to go in up unrepresented is foolish.
Keep in mind that an IRS agent has the right to expand the tax audit beyond the scope of the initial paperwork sent to the taxpayer and many times tax professionals can keep the IRS from going much deeper into a taxpayer or companies tax return.
I should also say if you have a squeaky clean tax return and no skeletons in the closet I see no reason at all why you cannot represent yourself during an IRS tax audit.
When many people come into my office and I see there is absolutely nothing wrong with their tax return, and I find that the IRS’s just conducting a random audit, I recommend in those cases taxpayers should go and by themselves and avoid professional tax fees.
You only call a tax professional when you receive an IRS audit notice and truly need tax help because you are not sure some of the issues on your tax return. Each taxpayer usually knows the depth and scope of their own tax return and whether the IRS has true audit potential.
Facts of IRS Audits
The Internal Revenue Service audits 1.03% of all tax returns filed.
I would not recommend you play the IRS lottery game because of your tax return false out of the national standards you have an excellent chance of being audited by the Internal Revenue Service.
- Nationwide the IRS audits 1.5 million tax returns per year.
- 359,000 are actually audited by local IRS agents and rest are by mail or correspondence tax audits.
- IRS collects $10.2 billion a year as a result of IRS audits by field agents and $5.2 billion a year by document matching programs.
What is an IRS audit?
An IRS audit is a review, examination of an organization’s or individual’s accounts and financial information to ensure information is being reported correctly, according to the tax laws, to verify the amount of tax reported is accurate.
How far back can the IRS go to audit my return?
The IRS can include returns filed within the last three years in an audit. Additional years can be added if a substantial error is identified.
If a substantial error is identified, the IRS will not go back more than the last six years.
The IRS tries to audit tax returns as soon as possible after they are filed.
Accordingly most audits will be of returns filed within the last two years.
Why does the IRS audit tax returns, what are the IRS audit triggers?
- National Research Program
The National Research Program (NRP), one of the top workload priorities, is a comprehensive effort by the IRS to measure compliance for different types of taxes and various sets of taxpayers.
The NRP approach to measuring reporting compliance balances research quality, efficiency, and the reduction of taxpayer burden.
It establishes a tax return sample that is representative of the taxpayer population. NRP uses case building data to determine if the return should be considered accurate as filed.
- Abusive Transactions and Technical Issues
The promoter workload for the Area is developed and perfected by the Lead Development Center (LDC) from leads surfaced by the field or other sources.
The LDC reviews and approves promoter investigations and assigns a tracking code to each investigation. The participant lists of approved promoter investigations are reviewed and filtered by the Abusive Transaction List keeper.
- High Income/High Wealth Taxpayers
The high income high wealth taxpayers workload is pre-identified at a national level from several specific selection models. These cases are shipped to the Area PSP for assignment to the field examination groups.
The high income non-filer (HINF) workload originates from various sources. Criteria has been established for:
1. High risk schedule C cases
2. Cases with fraud indicators
3. Cases referred from Area offices
4. Cases with flow-through K-1 income
5. Any leads received in the Area during the year that meet the HINF criteria will be forwarded to the Brookhaven Campus for filtering and case building.
- Discriminant Index Function (DIF) Overview
These formulas were developed based on available NRP data. Each return measured under DIF receives a DIF score. Generally, the higher the score, the greater the audit potential. The highest scored returns are made available to Examination upon request.
DIF mathematical formulas are confidential and for official use only. The DIF score assigned to a return should not be disclosed.
The following types of returns are computer scored under the DIF System:
1. Individual
2. Corporation
3. S Corporation
4. Partnership
5. Fiduciary
If you are going through an IRS tax audit and need help with IRS tax audit defense it only makes sense to hire former IRS agents who worked at a local South Florida IRS offices call us today for free initial tax consultation.
Hollywood, Hallandale – IRS Tax Audit Defense, Representation Affordable Experts, Local
