Hire Former IRS Agents who worked out of the local South Florida IRS offices. We have over 60 years of direct work experience right here in the local IRS offices.
Stop your worry today. 954-492-0088.
After years of working at the IRS, Fresh Start Tax is one of the finest firms for tax representation anywhere. We are comprised of former IRS Agents, Managers, and Instructors. Call us today so you never have to speak to IRS.
IRS has put out a list of the most frequently asked questions about tax audits.
Audit Facts:
IRS Audits 1% of all tax returns under $200K
IRS Audits 2% of returns upward to $10 million
IRS Audits 6% of returns from $10 million and up.
IRS Audit FAQs
Does the IRS ever contact a taxpayer or the tax preparer via e-mail to initiate an audit?
Does filing an amended return affect the return selection process?
Why was my return selected for audit?
Where will the audit be held
Can you request the audit be conducted at the IRS office instead of at your place of business?
Can the audit be transferred to another IRS office?
How long should the records related to a business or other long-term asset be kept
How long should payroll records be kept?
After an auditor completes the audit, will the case be reviewed to ensure the audit results are correct?
It’s time for my appointment and I’m not ready. What do I do?
How far back can the IRS go to audit my return?
Answers to the FAQ’s
Does the IRS ever contact a taxpayer or the tax preparer via e-mail to initiate an audit?
The IRS does not contact an individual via e-mail for an initial appointment. Contact related to being selected for an audit will be made via telephone or mail only, due to disclosure requirements.
Does filing an amended return affect the return selection process?
Filing an amended return does not affect the selection process of the original return. However, amended returns also go through a screening process and the amended return may be selected for audit.
Why was my return selected for audit?
When returns are filed, they are compared against “norms” for similar returns. The “norms” are developed from audits of a statistically valid random sample of returns. These returns are selected as part of the National Research Program which the IRS conducts to update return selection information.
The return is next reviewed by an experienced auditor. At this point, the return may be accepted as filed, or if based on the auditor’s experience questionable items are noted, the agent will identify the items noted and the return is forwarded for assignment to an examining group.
Upon assignment to a group, the return is reviewed by the manager. Items considered in assigning a case are: factors particular to the area such as issues pertaining to construction, farming, timber industry, etc. that have specific factors and rules that apply. Based on the review, the manager can accept the return or assign the return to an auditor. The assigned auditor again reviews the return for questionable items and either accepts it as filed or contacts the taxpayer to schedule an appointment.
Where will the audit be held?
It depends on the type of audit being conducted.
Audits by Mail/Correspondence Audit: Some audits are conducted entirely by mail. If the audit is conducted by mail, you will receive a letter from the IRS asking for additional information about certain items shown on the tax return such as income, expenses, and itemized deductions.
In-Person Audits are audits conducted either at a local IRS office or at your business location.
Can you request the audit be conducted at the IRS office instead of at your place of business?
If the audit has been scheduled to be conducted at your location, it will generally be conducted where the books and records are located. Requests to transfer the audit to another location, including an IRS office, will be considered but may not be granted. Treasury Regulation 301.7605-1(e), Time and place of audit, discusses the items considered when a request for a change in location is made.
Can the audit be transferred to another IRS office?
You can request a transfer of an audit if you have moved. Several factors will be considered such as your current location, the location of the business and where the books and records are maintained.
If the audit is by correspondence, you can request a face-to-face audit because the books and records may be too voluminous to mail.
How long should the records related to a business or other long-term asset be kept?
In the case of an asset, records related to the asset should generally be kept for as long as you have the asset plus three years. If the asset was exchanged, the basis for the new asset may include the exchanged asset so the records for both assets will need to be retained until the new asset is disposed plus three years from the file date of the tax return for the year of disposition.
How long should payroll records be kept?
In general, payroll records should be kept for six years with a review of the file to see if any items relating to current employees should be retained with current records.
After an auditor completes the audit, will the case be reviewed to ensure the audit results are correct?
All cases may be reviewed by the auditor’s manager either during the audit or upon completion. If errors are noted by the manager, the auditor will contact you to advise you about the proposed correction and what impact this may have on the amount of tax due.
It’s time for my appointment and I’m not ready. What do I do?
If you do not have all the information requested, contact your auditor at the number reflected in the notification letter to discuss what information is currently available. It may be possible to begin the audit with the information available rather than postpone the appointment. The quicker the audit begins, the quicker it can be resolved. In addition, if the initial appointment is scheduled beyond 45 days from the initial action, managerial approval is required.
How far back can the IRS go to audit my return?
Generally, 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. Generally, 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.
If an audit is for an older year, you may be requested to extend the statute of limitations for assessment of your tax return. The statute of limitations limits the time allowed to assess additional tax. The statute of limitations is generally three years after a return is due or was filed, whichever is later. There is also a statute of limitations for making refunds.
If the audit is not resolved and the statute of limitations date is nearing, you may be asked to extend the statute of limitations date. This will allow you additional time to provide further documentation to support your position, request an appeal if you do not agree with the audit results, or to claim a tax refund or credit. It also allows the IRS time to complete the audit and provides time to process the audit results.
You do not have to agree to extend the statute of limitations date. However, if you do not agree, the examiner will be forced to make a determination based upon the information they currently have. Therefore, the examiner may not be able to consider additional adjustments, such as expenses, that could lower the amount of tax due.
The information is taken and extracted form the irs.gov site.
Hire Former IRS Agents who worked out of the local South Florida IRS offices. We have over 60 years of direct work experience right here in the local IRS offices.
Stop your worry today. 954-492-0088.
After years of working at the IRS, Fresh Start Tax is one of the finest firms for tax representation anywhere. We are comprised of former IRS Agents, Managers, and Instructors. Call us today so you never have to speak to IRS. IRS has put out a list of the most frequently asked questions about tax audits.
Audit Facts:
IRS Audits 1% of all tax returns under $200K
IRS Audits 2% of returns upward to $10 million
IRS Audits 6% of returns from $10 million and up.
IRS Audit FAQs
Does the IRS ever contact a taxpayer or the tax preparer via e-mail to initiate an audit?
Does filing an amended return affect the return selection process?
Why was my return selected for audit?
Where will the audit be held
Can you request the audit be conducted at the IRS office instead of at your place of business?
Can the audit be transferred to another IRS office?
How long should the records related to a business or other long-term asset be kept
How long should payroll records be kept?
After an auditor completes the audit, will the case be reviewed to ensure the audit results are correct?
It’s time for my appointment and I’m not ready. What do I do?
How far back can the IRS go to audit my return?
Answers to the FAQ’s
Does the IRS ever contact a taxpayer or the tax preparer via e-mail to initiate an audit?
The IRS does not contact an individual via e-mail for an initial appointment. Contact related to being selected for an audit will be made via telephone or mail only, due to disclosure requirements.
Does filing an amended return affect the return selection process?
Filing an amended return does not affect the selection process of the original return. However, amended returns also go through a screening process and the amended return may be selected for audit.
Why was my return selected for audit? When returns are filed, they are compared against “norms” for similar returns. The “norms” are developed from audits of a statistically valid random sample of returns. These returns are selected as part of the National Research Program which the IRS conducts to update return selection information.
The return is next reviewed by an experienced auditor. At this point, the return may be accepted as filed, or if based on the auditor’s experience questionable items are noted, the agent will identify the items noted and the return is forwarded for assignment to an examining group. Upon assignment to a group, the return is reviewed by the manager. Items considered in assigning a case are: factors particular to the area such as issues pertaining to construction, farming, timber industry, etc. that have specific factors and rules that apply. Based on the review, the manager can accept the return or assign the return to an auditor. The assigned auditor again reviews the return for questionable items and either accepts it as filed or contacts the taxpayer to schedule an appointment.
Where will the audit be held?
It depends on the type of audit being conducted.
Audits by Mail/Correspondence Audit: Some audits are conducted entirely by mail. If the audit is conducted by mail, you will receive a letter from the IRS asking for additional information about certain items shown on the tax return such as income, expenses, and itemized deductions.
In-Person Audits are audits conducted either at a local IRS office or at your business location.
Can you request the audit be conducted at the IRS office instead of at your place of business?
If the audit has been scheduled to be conducted at your location, it will generally be conducted where the books and records are located. Requests to transfer the audit to another location, including an IRS office, will be considered but may not be granted. Treasury Regulation 301.7605-1(e), Time and place of audit, discusses the items considered when a request for a change in location is made.
Can the audit be transferred to another IRS office?
You can request a transfer of an audit if you have moved. Several factors will be considered such as your current location, the location of the business and where the books and records are maintained.
If the audit is by correspondence, you can request a face-to-face audit because the books and records may be too voluminous to mail.
How long should the records related to a business or other long-term asset be kept?
In the case of an asset, records related to the asset should generally be kept for as long as you have the asset plus three years. If the asset was exchanged, the basis for the new asset may include the exchanged asset so the records for both assets will need to be retained until the new asset is disposed plus three years from the file date of the tax return for the year of disposition.
How long should payroll records be kept?
In general, payroll records should be kept for six years with a review of the file to see if any items relating to current employees should be retained with current records.
After an auditor completes the audit, will the case be reviewed to ensure the audit results are correct?
All cases may be reviewed by the auditor’s manager either during the audit or upon completion. If errors are noted by the manager, the auditor will contact you to advise you about the proposed correction and what impact this may have on the amount of tax due.
It’s time for my appointment and I’m not ready. What do I do?
If you do not have all the information requested, contact your auditor at the number reflected in the notification letter to discuss what information is currently available. It may be possible to begin the audit with the information available rather than postpone the appointment. The quicker the audit begins, the quicker it can be resolved. In addition, if the initial appointment is scheduled beyond 45 days from the initial action, managerial approval is required.
How far back can the IRS go to audit my return?
Generally, 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. Generally, 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.
If an audit is for an older year, you may be requested to extend the statute of limitations for assessment of your tax return. The statute of limitations limits the time allowed to assess additional tax. The statute of limitations is generally three years after a return is due or was filed, whichever is later. There is also a statute of limitations for making refunds.
If the audit is not resolved and the statute of limitations date is nearing, you may be asked to extend the statute of limitations date. This will allow you additional time to provide further documentation to support your position, request an appeal if you do not agree with the audit results, or to claim a tax refund or credit. It also allows the IRS time to complete the audit and provides time to process the audit results.
You do not have to agree to extend the statute of limitations date. However, if you do not agree, the examiner will be forced to make a determination based upon the information they currently have. Therefore, the examiner may not be able to consider additional adjustments, such as expenses, that could lower the amount of tax due.
The information is taken and extracted form the irs.gov site.
Refund Inquiries made to the Internal Revenue Service Question: What will happen if I owe both back taxes to the IRS and back child support, state taxes, student loans, etc? Answer: If you owe delinquent federal taxes, the IRS will withhold the balance due from your refund.
If your refund exceeds the amount of your delinquent federal taxes, the IRS will adjust and your split will be refunded via direct debit. The IRS will deduct the difference from the amount you designated for the last account shown on Form 8888. If the difference exceeds the amount designated for the last account, the IRS will deduct the remainder from the amount designated to the next account, etc.
Additionally, if you owe delinquent state income taxes, back child support, or delinquent non-tax federal debts such as student loans, etc., the Department of Treasury’s Financial Management Service (FMS) will deduct the past-due amounts from the payment that appears first on the payment file received from the IRS (the IRS payment file orders accounts from the lowest to the highest routing number). If the debt exceeds the payment designated for the account that appears first on the payment file, FMS will reduce the payment designated for the account that appears next, etc. For questions about the deductions for past-due amounts, call FMS toll-free at 800-304-3107.
You will receive a letter explaining any adjustments the IRS made to your refund amount and direct deposit(s). You will receive a separate letter from FMS explaining any offset amount, the agency receiving the payment, the address and telephone number of the agency, and amount of your refund/direct deposit that was offset. If you dispute the debt on the letter you receive from FMS, you should contact the agency shown on the notice, not the IRS, because the IRS has no information about the validity of the debt.
Fresh Start Tax is one the highest rated tax resolution companies by the Better Business Bureau. We are experts in tax resolution. The question we are asked all the time is this, ” Can I settle for pennies on a dollar?” The answer is a guarded yes.
48,000 Offers in Compromise were reviewed by the IRS last year. Only 25% were accepted. Most of those offers accepted were submitted by professional tax firms. The average person has no clue what goes into the Offer process. They hear pennies on a dollar and everyone wants in. Before you give your money to any firm or organization, call us first so we can make sure you qualify.
A simple rule of thumb for an offer, you MUST offer the IRS the total liquidity you have in all your assets. Example: if you were going to sell everything you owned, turn it to cash and move to China, how many dollars would you have after selling everything? That amount is the least you can offer to the IRS.
The IRS spends hours working Offer in Compromises. Before any OIC goes into the IRS, our firm pre-screens them to make sure not only that you qualify, but also to ensure you have settled for the lowest possible amount. Being former IRS Agents, we know the IRS formulas for settlement.
Fresh Start Tax is one of the premier tax resolution firms in the country. We deal with all types of cases, from individuals to businesses and high dollar corporate entities. We have a staff that specializes in every type of case.
Some of our specialties include the following:
Immediate Tax Resolution and Representation
Offers in Compromise and Settlement
Back Taxes/ Unfiled or Never filed tax returns
Bank or Wage Levy Garnishments
Letters of Intent of Notice to Levy
IRS Tax Audits
Hardship, Part Pay Agreements
State Sales Tax Problems and Resolution
Our company resume:
Our staff has over 140 years of professional tax representation experience.
On staff are Board Certified Tax Attorney’s, CPA’S, former IRS Agents, Managers and Instructors.
Former State Department of Revenue Manager and Instructor.
We are extremely moral and ethical in all of our business dealings.
We have the highest rating given by the Better business Bureau.
We are fast, affordable and economical.
We are licensed to practice in all 50 States.
We put a premium on client communication.
Nationally Recognized Veteran, Former IRS Agent on Staff.
Our firm at Fresh Start Tax is asked this question almost every time we have a speaking engagement. With former IRS Audit Agents on our staff, we have the knowledge to represent you if you are having IRS Issues or going through a tax audit. Let a former IRS Tax Audit Manager represent you. The main question we are asked: How long should the records related to a business or other long-term asset be kept?
Answer: In the case of an asset, records related to the asset should generally be kept for as long as you have the asset plus three years. If the asset was exchanged, the basis for the new asset may include the exchanged asset so the records for both assets will need to be retained until the new asset is disposed plus three years from the file date of the tax return for the year of disposition. How long should payroll records be kept?
Answer: In general, payroll records should be kept for six years with a review of the file to see if any items relating to current employees should be retained with current records.
As a reminder, Tax Fraud has no statute. The IRS can go back as far as they deem necessary.
If you want to settle with the IRS why not have former IRS Agents who were managers, instructors and trainers process your case? We have on staff former IRS Agents who taught the OIC program to new agents. Who better to work your case ? Call us at 1-866-700-1040. Education from Fresh Start Tax: What is an Offer in Compromise?
* What You Must Know Before You File an Offer in Compromise
* Do You Qualify for an Offer in Compromise?
* How to File an Offer in Compromise An offer in compromise (OIC) is an agreement between a taxpayer and the Internal Revenue Service that settles the taxpayer’s tax liabilities for less than the full amount owed. Absent special circumstances, an offer will not be accepted if the IRS believes that the liability can be paid in full as a lump sum or through a payment agreement.
In most cases, the IRS will not accept an OIC unless the amount offered by the taxpayer is equal to or greater than the reasonable collection potential (RCP). The RCP is how the IRS measures the taxpayer’s ability to pay and includes the value that can be realized from the taxpayer’s assets, such as real property, automobiles, bank accounts, and other property. The RCP also includes anticipated future income, less certain amounts allowed for basic living expenses. Taxpayers should beware of promoters’ claims that tax debts can be settled through the offer in compromise program for “pennies on the dollar.” Three Types of OICs
The IRS may accept an offer in compromise based on three grounds: 1. Doubt as to Collectibility – Doubt exists that the taxpayer could ever pay the full amount of tax liability owed within the remainder of the statutory period for collection.
Example: A taxpayer owes $20,000 for unpaid tax liabilities and agrees that the tax she owes is correct. The taxpayer’s monthly income does not meet her necessary living expenses. She does not own any real property and does not have the ability to fully pay the liability now or through monthly installment payments. 2. Doubt as to Liability – A legitimate doubt exists that the assessed tax liability is correct. Possible reasons to submit a doubt as to liability offer include: (1) the examiner made a mistake interpreting the law, (2) the examiner failed to consider the taxpayer’s evidence or (3) the taxpayer has new evidence.
Example: The taxpayer was vice president of a corporation from 2004-2005. In 2006, the corporation accrued unpaid payroll taxes and the taxpayer was assessed a trust fund recovery penalty as a responsible party of the corporation. The taxpayer was no longer a corporate officer and had resigned from the corporation on 12/31/2005. Since the taxpayer had resigned prior to the payroll taxes accruing and was not contacted prior to the assessment, there is legitimate doubt that the assessed tax liability is correct. 3. Effective Tax Administration – There is no doubt that the tax is correct and there is potential to collect the full amount of the tax owed, but an exceptional circumstance exists that would allow the IRS to consider an OIC. To be eligible for compromise on this basis, a taxpayer must demonstrate that the collection of the tax would create an economic hardship or would be unfair and inequitable.
Example: Mr. & Mrs. Taxpayer have assets sufficient to satisfy the tax liability and provide full time care and assistance to a dependent child, who has a serious long-term illness. It is expected that Mr. and Mrs. Taxpayer will need to use the equity in assets to provide for adequate basic living expenses and medical care for the child. There is no doubt that the tax is correct.
OIC Payment Options In general, a taxpayer must submit a $150 application fee and initial payment along with the Form 656, Offer in Compromise. Taxpayers may choose to pay their offer in compromise in one of three payment options: 1. Lump Sum Cash Offer – Payable in non-refundable installments, the offer amount must be paid in five or fewer installments upon written notice of acceptance. A non-refundable payment of 20 percent of the offer amount along with the $150 application fee is due upon filing the Form 656. If the offer will be paid in 5 or fewer installments in 5 months or less, the offer amount must include the realizable value of assets plus the amount that could be collected over 48 months of payments or the time remaining on the statute, whichever is less. If the offer will be paid in 5 or fewer installments in more than 5 months and within 24 months, the offer amount must include the realizable value of assets plus the amount that could be collected over 60 months of payments, or the time remaining on the statute, whichever is less. If the offer will be paid in 5 or fewer installments in more than 24 months, the offer amount must include the realizable value of assets plus the amount that could be collected over the time remaining on the statute. 2. Short Term Periodic Payment Offer – Payable in non-refundable installments; the offer amount must be paid within 24 months of the date the IRS received the offer. The first payment and the $150 application fee are due upon filing the Form 656. Regular payments must be made during the offer investigation. The offer amount must include the realizable value of assets plus the total amount the IRS could collect over 60 months of payments or the remainder of the statutory period for collection, whichever is less. 3. Deferred Periodic Payment Offer – Payable in non-refundable installments; the offer amount must be paid over the remaining statutory period for collecting the tax. The first payment and the $150 application fee are due upon filing the Form 656. Regular payments must be made during the investigation.
The offer amount must include the realizable value of assets plus the total amount the IRS could collect through monthly payments during the remaining life of the statutory period for collection.
The IRS is not bound by either the offer amount or the terms proposed by the taxpayer. The OIC investigator may negotiate a different offer amount and terms, when appropriate. The investigator may determine that the proposed offer amount is too low or the payment terms are too protracted to recommend acceptance. In this situation, the OIC investigator may advise the taxpayer as to what larger amount or different terms would likely be recommended for acceptance.
Payments and Application Fees
When filing an offer in compromise, two separate remittance documents should be sent, one for the application fee and the other for the required offer payment. All payments should be made by check or money order made payable to the United States Treasury. Practitioners who file multiple OICs at the same time should not combine application fees for multiple clients. The Form 656-PPV, Offer in Compromise Payment Voucher, included in the Form 656, should be completed and attached to any periodic payment(s) that becomes due. Failure to submit any required periodic payments, after the initial payment has been submitted, will result in the offer being declared withdrawn. For offers originally sent to Holtsville, NY, send payments to: P.O. Box 9011, Holtsville, NY 11742. For offers originally sent to Memphis, TN, send payments to: AMC Stop 880, P.O. Box 30834, Memphis, TN 38130-0634.
The OIC application fee reduces the assessed tax or other amounts due. The application fee will be returned if the OIC is deemed not to be processable. Unless the offer in compromise has been submitted under doubt as to liability or a completed Form 656-A is included with the Form 656, the $150 application fee must be included with the offer or the IRS will return the offer.
Hire Former IRS Agents who worked out of the local South Florida IRS offices. We have over 60 years of direct work experience right here in the local IRS offices.