IRS Payroll Tax Audit – Professional Audit Tax Help – Fresh Start Tax – Miami, Ft.Lauderdale, West Palm
Fresh Start Tax 954-492-0088 South Florida’s Premier Tax Firm for IRS Payroll and Income Tax audits.
Former IRS Agents, Managers .
We have over 60 years of direct IRS expereince out of the South Florida IRS offices.
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Our tax practice is dedicated to IRS Representation. Our tax professionals have been serving the South Florida area since 1982. We are comprised of Former IRS agents ,managers and instructors along with Board Certified Tax Attorney’s and CPA’s. We have 205 years of direct IRS experience.
As former IRS agents we use to audit companies for payroll tax audits. We know all the tax strategies for the very best resolution.
How IRS makes their determinations:
To determine whether a worker is an independent contractor or an employee under common law, you must examine the relationship between the worker and the business. All evidence of control and independence in this relationship should be considered.
The facts that provide this evidence fall into three categories – Behavioral Control, Financial Control, and the Relationship of the Parties.
Behavioral Control.
covers facts that show whether the business has a right to direct or control how the work is done, through instructions, training, or other means.
Financial Control.
covers facts that show whether the business has a right to direct or control the financial and business aspects of the worker’s job.
This includes:
* The extent to which the worker has unreimbursed business expenses
* The extent of the worker’s investment in the facilities used in performing services
* The extent to which the worker makes his or her services available to the relevant market
* How the business pays the worker, and
* The extent to which the worker can realize a profit or incur a loss
Relationship of the Parties covers facts that show how the parties perceive their relationship. This includes:
* Written contracts describing the relationship the parties intended to create,
* The extent to which the worker is available to perform services for other, similar businesses,
* Whether the business provides the worker with employee-type benefits, such as insurance, a pension plan, vacation pay, or sick pay,
* The permanency of the relationship, and,
* The extent to which services performed by the worker are a key aspect of the regular business of the company
Call us today to have Former IRS agents who worked out the local IRS get you results.
We are former IRS Agents, Managers and Instructors. We can help if you are going through a IRS tax audit. 1-866-700-1040. Highest BBB rating in the business.
Inquiring minds always want to know, why are tax returns selected for a IRS Tax Audit?. When I worked for the IRS I was asked that question almost every day. While there are many types of selection methods I will let you know a couple of the most common methods. These two methods probably account for 90% of all tax audits conducted by the Internal Revenue Service. The most common methods of selection: The Computer Scoring Method
Some tax returns are selected for a tax examination on the basis of computer scoring. The IRS Computer programs give each tax return a numeric “score”. The Discriminant Function System (DIF) score rates the potential for change, based on past IRS experience with similar returns. This information is saved from year to year and is programed to adjust to national changes. This by far is the most method of tax audit selection. The Unreported Income DIF (UIDIF)
(UIDIF) score rates the return for the potential of unreported income. IRS personnel screen the highest-scoring returns, selecting some for audit and identifying the items on these returns that are most likely to need review.
An example of this is pulling tax returns within a certain zip code because the standard of living requires higher income levels and those are not found on the tax return. IRS could pull that return.
Large Corporations — The IRS examines many large corporate returns annually. Generally, 6% of all corporations find tax audits. Information Matching — Some tax returns are examined because payer reports, such as Forms W-2 from employers or Form 1099 interest statements from banks, do not match the income reported on the tax return. 1.4 million tax returns are audited by this method. This is simply known as the matching program.
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 examination.
If a corporation was audited and adjustments were made, IRS picks up the associated 1040’s of the partners. Other Reasons — Area offices may identify returns for examination in connection with local compliance projects. These projects require higher level management approval and deal with areas such as local compliance initiatives, return preparers or specific market segments.
If the area you live in has a particular industry, IRS may develop a market specialization program just for that industry. They have trained IRS Agents that only deal with that industry.
IRS is always coming up with new ways to keep up with the taxpayer. If you are pulled for an IRS Audit, you will always save money when you hire a former IRS Agent for your representation.
Being audited by the Internal Revenue Service? Call former IRS agents and managers. We’re a local tax from that has over 60 years of direct work experience at the local South Florida IRS offices. Call and visit us for a free consultation today.
If you have been audited by the IRS or have just received a notice or letter that tax examination is about to take place call us today for free tax consultation so we can help you get through this worry free. 954-492-0088 We are comprised of tax attorneys, CPAs, enrolled agents and more importantly former IRS agents who were auditors and appeals agents with the Internal Revenue Service.
As a result we know all the tax policies, tax codes and IRS audit procedures.
We have over 206 years of professional IRS experience in over 60 years of working directly for the Internal Revenue Service and the local South Florida IRS offices You can hire Former IRS Agents who worked in the local South Florida IRS offices. We worked out of the Miami, Ft.Lauderdale and West Palm Beach IRS offices. We know all the tax policies and IRS tax procedures to get you the best possible result. Free tax consult 954-492-0088 We are A plus rated!!!
Different Methods IRS can use to audit your tax return
The IRS uses different examination techniques depending on the facts and circumstances of each case. As a former IRS agent, here are some of the methods used on cases.
Indirect Method
The indirect method involves the use of circumstantial evidence to determine the tax liability based on omitted income, overstated expenses, or both. Circumstantial evidence is evidence from which more than one logical conclusion can be reached.
To support adjustments for additional taxable income, both the credibility of the evidence and the reasonableness of the conclusion must be evaluated before the determination of tax liability is made.
Analytical reviews and testing of the taxpayer’s books and records conducted during the minimum income probes may result in the identification of additional taxable income based on circumstantial evidence from which an inference can be made.
The Financial Status Analysis and Bank Account Analysis are not prohibited by IRC (Internal Revenue Code). Limitation on the Use of Financial Status Audit Techniques, simply because an adjustment to taxable income supported by indirect (circumstantial) evidence may be the result. Examples
As an example: The minimum income probes for an individual business return includes a Bank Account Analysis . There is an identifiable potential source of additional taxable income. The records used for the analysis are the bank account statements, which are prepared by a third party, and are credible evidence. The characterization of excess funds as additional taxable income is reasonable because deposits of nontaxable funds are identified and eliminated.
IRS Audit – Listed Are Examination Techniques Ft. Lauderdale, Miami, West Palm Beach Formal Indirect Method
The formal indirect methods are audit techniques used to determine the tax liability based on the amount of unreported income.
a. Source and Application of Funds Method
b. Bank Deposit and Cash Expenditures Method
c. Markup Method
d. Unit and Volume Method
e. Net Worth Method
The formal indirect methods are also known as Financial Status Audit Techniques. They are distinguishable from other audit techniques by the following characteristics:
Reliance on indirect evidence of income,
In-depth analysis of actual costs that requires the extensive collection of detailed information, and
Subject to IRC 7602(e) , which states that “the Secretary shall not use financial status or economic reality examination techniques to determine the existence of unreported income of any taxpayer unless the Secretary has a reasonable indication that there is a likelihood of such unreported income.”
Formal indirect methods are appropriate when the taxpayer’s books and records are missing, incomplete, or irregularities are identified; or the Financial Status Analysis indicates a material imbalance of cash flows after consideration of other adjustments identified during the examination.
The IRS has many methods they employ, these are just a few to wet your whistle.
For more detailed information or for audit representation, call Fresh Start Tax at 1-866-700-1040.
We are former agents who have been down this road many times. IRS Audit – Listed Are Examination Techniques Ft. Lauderdale, Miami, West Palm Beach
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.
