by Fresh Start Tax | Jun 3, 2013 | IRS Tax Audit
Federal Tax Audits – Affordable Expert Representation 1-866-700-1040
We are local tax experts practicing right here in South Florida since 1982.Free initial tax consultations.
We have a combined 60 years of direct IRS work experience in the local South Florida tax offices. As former IRS employees we worked in a local, district, and regional tax offices of the IRS.
We worked as supervisors, managers, and taught tax law and the local, district, and regional tax offices. We are the real deal and we are affordable.
If you are going to undergo a federal tax audit it only makes sense to hire former IRS agents, managers and tax instructors who know all the inner workings of the Internal Revenue Service.
With over a combined 60 years of IRS experience we are one of the most experienced tax firms, we can represent taxpayers in all 50 states for IRS federal tax audits.
We are comprised of tax attorneys, tax lawyers, certified public accountants, enrolled agents, and former IRS agents.
As former IRS auditors and managers we know all the protocols, all systems, and all the settlement formulas and techniques to marginalize any IRS tax audit.
While working at Internal Revenue Service we taught tax law.
We are A+ rated by the Better Business Bureau and been in private practice since 1982.
We are experts when it comes to IRS federal tax audits. We are the affordable tax firm.
Why a IRS Federal Tax audit
IRS examines federal tax returns to verify that the tax reported is correct.
Selecting a return for examination does not always suggest that the taxpayer has either made an error or been dishonest.
In fact, some IRS tax examinations result in a refund to the taxpayer or acceptance of the return without change.
The overwhelming majority of taxpayers files returns and make payments timely and accurately. Taxpayers have a right to expect fair and efficient tax administration from the IRS, including verification that taxes are correctly reported and paid with enforcement actions against those who fail to comply voluntarily.
How do you when to hire a tax professional or do it yourself
Being a former IRS agent I can tell you that there are times that taxpayers may represent themselves during an IRS federal tax audit.
The rule of thumb is quite simple, if you have a clean tax return and have all documentation by all means represent yourself during an IRS Federal tax audit.
If you have any issues, concerns, or problems that you think may arise it is absolutely in your best interest to hire a certified local tax professional. You should always meet the person face to face who will be handling your IRS federal tax audit defense.
Your Taxpayer Rights
The IRS trains its employees to explain and protect taxpayers’ rights throughout their contacts with taxpayers.
These rights include:
1. A right to professional and courteous treatment by IRS employees.
2. A right to privacy and confidentiality about tax matters.
3. 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.
4. A right to representation, by oneself or an authorized representative.
5. A right to appeal disagreements, both within the IRS and before the courts.
How Federal Tax Returns Are Selected for Examination
The IRS selects returns using a variety of methods, including:
- 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.
- Computer Scoring — Some returns are selected for examination on the basis of computer scoring. Computer programs give each return numeric “scores”. The Discriminant Function System (DIF) score rates the potential for change, based on past IRS experience with similar returns. The Unreported Income DIF (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.
- Large Corporations — The IRS examines many large corporate returns annually.
- Information Matching — Some 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 via this information matching method.
- Related Examinations — Federal Tax 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.
- Other — 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. Each district in each region has specialized tax audits. Many times these are referred to as the market specialization program.
Federal IRS Examination Methods
An IRS Federal examination 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).
Taxpayers may make audio recordings of interviews, provided they give the IRS advance notice.
If the time, place, or method that the IRS schedules is not convenient, the taxpayer may request a change, including a change to another IRS office if the taxpayer has moved or business records are there.
The audit notification letter tells which records will be needed. Taxpayers may act on their own behalf or have someone represent or accompany them. If the taxpayer is not present, the representative must have proper written authorization.
The auditor will explain the reason for any proposed changes. Most taxpayers agree to the changes and the audits end at that level.
IRS Federal Appeal Rights
IRS Federal Appeal Rights are explained by the examiner at the beginning of each audit. Taxpayers who do not agree with the proposed changes may appeal by having a supervisory conference with the examiner’s manager or appeal their case administratively within the IRS, to the U.S. Tax Court, U.S. Claims Court or the local U.S. District Court.
If there is no agreement at the closing conference with the examiner or the examiner’s manager, the taxpayer has 30 days to consider the proposed adjustments and their next course of action.
If the taxpayer does not respond within 30 days, the IRS issues a statutory notice of deficiency, which gives the taxpayer 90 days to file a petition to the Tax Court. The Claims Court and District Court generally do not hear tax cases until after the tax is paid and administrative refund claims have been denied by the IRS.
The tax does not have to be paid to appeal within the IRS or to the Tax Court. A case may be further appealed to the U.S. Court of Appeals or to the Supreme Court, if those courts accept the case.
IRS Federal Tax Audits – Affordable Attorneys, Lawyers, CPA’s, Former IRS – Miami, Ft.Lauderdale, Palm Beaches – South Florida
by Fresh Start Tax | May 17, 2013 | IRS Tax Audit
South Floridians have always wondered how and why they were selected for an IRS Tax Audit. The IRS audits over 1.4 million tax returns annually and taxpayers are fearful of being audited. The answer may seem overly simple, but most people do not have knowledge of the audit process.
Each tax return is issued a DIF Score (Discriminatory Index Function). According to the IRS, a DIF Score “is a mathematical technique used to score income tax returns for examination potential.” This technique establishes the National Average Guidelines. Generally, if a DIF score is above the national average, then the risk of an audit escalates.
The highest scoring tax returns are then forwarded to an IRS Examiner for further review.
So what triggers a high DIF Score? Falling out of the National Average Guidelines in the areas of :
- Charitable Contributions,
- Casualty Losses,
- Home Office,
- and Travel & Entertainment will affect the tax return’s DIF Score.
- High DIF scores
Other audit triggers are unfiled tax returns and failure to file the FBAR (Foreign Bank and Financial Account) Form.
How DIF Actually Works
To arrive at the DIF score for each tax return, the IRS computer identifies returns by assigning weights and certain basic tax return characteristics. These weights are added together to obtain a systemic composite score for all tax returns. That score is used to rank all returns into numerical sequence.
The highest scores are then manually reviewed by IRS Agents at the Service Centers to determine the merit and worthiness of a Tax Audit.
Since each return is manually reviewed, if you have an unusually high deduction, attach a copy of the bill, receipt and an explanation to the return. Those extra steps will probably prevent that tax return from the dreaded IRS Tax Audit.
The number of audits performed annually is also determined by the IRS Annual Budget and Agent availability, region by region.
According to the 2013 Proposed Budget, the IRS has increased appropriations again to increase resources for the Enforcement Division. This includes investigations, examinations and collections.
Other Reasons why IRS selected your tax return for an IRS audit
1. High income.
If your income is $200,000.00 and over; the audit rate will be one-in-twenty seven of being audited. If your income is $1,000,000.00 or more, the audit rate will be one-in-eight of being audited. This is just a fact of life.
2. Failing to report all of your taxable income.
The IRS receives copies of all 1099′s, W-2′s, W-2G’s and K-1′s that you receive. If the income from the 1099′s, W-2′s, W2G’s and K-1′s are not shown on the tax return, the tax return will be audited.
3. Deducting the home office deduction.
The space used in your home must be used “exclusively and regularly” as your principal place of business. “Exclusive use” means that a specific area of the home is used only for trade or business. If you can prove the home office deduction, then take it. If you can’t prove it, don’t take it.
4. Deducting large charitable contributions.
If your charitable deductions are large compared with your income, the return will be audited. The IRS is aware of what the average charitable donation is for a given income level. If you have donated and deducted a conservation easement to a charity, chances are good that you will be audited.
5. Deducting rental losses.
Normally, the passive loss rules prevent rental losses from being deducted. There are two exceptions, if you actively participate in the renting of your property, you can deduct up to $25,000.00 of the loss against your other income; but this $25,000.00 limitation phases out as adjusted gross income exceeds $100,000.00. The second exception applies to real estate professionals who spend more that 50% of their working hours and 750 or more hours each year materially participating in reals as a developer, broker, landlord or the like. The IRS will be requesting that you prove the required hours, especially if are a full time employee.
6. Deducting business meals, travel and entertainment.
The IRS has specific record keeping requirements for these type of deductions. The IRS is aware that many taxpayers overstate these type of deductions.
7. Deducting losses from a hobby activity.
If you treat your favorite hobby as a business on your tax return with a net loss, you have a good chance of being audited. If you are audited, you will need to prove that your activity is a profit making activity and not a costly hobby. So make sure that you run your activity in a businesslike manner and can substantiate your expenses with supporting documents.
8. Running a cash business.
If you are in a cash-intensive business, like taxis, car washes, bars , hair salons, restaurants, you will be audited. The IRS is aware that individuals who primarily receive cash, don’t report all of their taxable income. The IRS has various audit techniques to determine unreported cash income.
9. Failing to report a foreign bank account.
If you fail to report a foreign bank, you will be assessed large penalties. If you have any signature authority over a foreign bank account, you will need to consult with a tax professional to determine the correct reporting requirements for that account.
10. Engaging in currency transactions.
If you are engaged in cash transactions in excess of $10,000.00, the IRS will receive reports of these transactions from the financial institutions. Further, if you engage in suspicious cash activities, the IRS will receive a “suspicious-activity report” from the various financial institutions.
These transactions usually indicate that the the taxpayer is trying to hide income from the IRS. Try to avoid these type of transactions.
We are a local South Florida tax firm comprised of tax attorneys, certified public accountants, enrolled agents and former IRS agents, managers and tax instructors who have over 60 years of combined work experience at the Internal Revenue Service in the local South Florida offices.
We have worked as IRS audit agents, revenue agents, IRS audit managers and supervisors and lastly IRS appellate agents.
We know every aspect of IRS tax audits and we are true local experts that can handle tax audits of any kind.
We have been in private practice since 1982 right here in South Florida and have an A+ rating by the Better Business Bureau. We are available for free tax consultations and we can fully review your case and give you the various options and methods of resolution. We truly are IRS tax audit experts.
by Fresh Start Tax | May 17, 2013 | IRS Tax Audit
IRS Individual, Business, Corporate Tax Audits – Affordable Tax Audit Experts – Miami, Ft.Lauderdale, Palm Beaches 954-492-0088
Trust your audit experience to former IRS agents, managers, and tax instructors who taught tax law at the Internal Revenue Service in the local South Florida IRS offices.
If you have received an IRS tax audit notice on individual, business or corporate tax return contact us today and speak directly to affordable IRS tax audit experts.
We have over 206 years of professional tax experience in over 60 years working directly for the Internal Revenue Service in the local South Florida the district, regional tax offices of the Internal Revenue Service.
We have worked in South Florida since 1982 and have an A+ rating by the Better Business Bureau. We offer free initial tax consultations. Come and visit us so we can explain how we can help you during your individual, business, corporate IRS tax audit. We are the affordable tax audit experts.
We have worked as former IRS agents who audited tax returns and worked in the Appellate Division’s. We know every aspect of IRS tax audits.
We know why you are audited and how to avoid audits in the future. We are a wealth of information for clients.
As a result of our years of IRS Audit experience we know all the tax formulas, tax statistics, tax policies, and the IRS individual, business, and corporate tax strategies when the IRS audits tax returns.
Let our years of IRS audit experience work for you. We will assure that you pay the lowest amount allowed by law.
IRS Audit Selection for individual, business and corporate tax audits
Selecting a tax return for a IRS audit does not always suggest that an error has been made.
Returns are selected using a variety of methods, including:
- Random selection and computer screening – sometimes returns are selected based solely on a statistical formula.
- Document matching – when payor records, such as Forms W-2 or Form 1099, don’t match the information reported.
- 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 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.
Keep in mind if you do not like the results of your IRS tax audit for your individual, business or corporate tax return you can always file an IRS appeal.
What Can Appeals Do for You?
Many of the different departments within IRS are responsible for making decisions concerning the application of tax law to various taxpayer issues.
In some cases, agreement on these decisions, or determinations, cannot be reached. In other words, the taxpayer does not agree with the determination.
This is where Appeals comes in. Appeals is independent of any other IRS office and serves as an informal administrative forum for any taxpayer who disagrees with an IRS determination.
Appeals provides a venue where disagreements concerning the application of tax law can be resolved on a fair and impartial basis for both the taxpayer and the government.
The mission of Appeals is to settle tax disagreements without having to go to the Courts and a formal trial.
The IRS news on IRS tax audits and other matters
The Internal Revenue Service delivered a strong year for taxpayers during FY 2012, maintaining key service and enforcement priorities despite a number of challenges.
In the enforcement area, audits of individuals topped 1 million for the sixth year in a row, with a 1.03% coverage rate out of all tax returns filed.
IRS Tax Audits in the upper income ranges remained substantially higher than other categories.
The IRS increased examinations across all categories of business returns by more than 12% in FY 2012, with the largest increases coming in audits of flow-through entities, which include partnerships and Sub-chapter S corporations.
Rates exceeded 20% for the largest corporations.
The IRS collected more than $50 billion in enforcement revenue in FY 2012, the third year in a row topping that figure. The 2012 numbers were lower than 2010 and 2011, which were unusual years with enforcement dollars helped by large numbers of offshore tax cases coming in.
More than 38,000 disclosures of offshore accounts have been made to date through the IRS’ offshore voluntary disclosure programs.
In addition, the economic slowdown contributed to lower enforcement figures, as most enforcement dollars collected resulted from audits of returns for years during the slowdown.
Another factor behind the FY 2012 numbers reflected changes in agency staffing and budget resources. After a nearly flat budget in FY 2011, the IRS’ FY 2012 budget was reduced by $305 million.
This reduction affected the level of staffing available to deliver service and enforcement programs.
Overall full-time staffing has declined by more than 8% over the last two years, and staffing for key enforcement occupations fell nearly 6% in the past year.
Also in FY 2012, the IRS continued to confront the challenge of refund fraud caused by identity theft. The IRS more than doubled the number of staff dedicated to preventing refund fraud and assisting taxpayers victimized by identity theft, with more than 3,000 employees working in this area.
As a result of these increased efforts, the IRS in FY 2012 was able to prevent the issuance of more than 3 million fraudulent refunds worth more than $20 billion, an increase from approximately 1.8 million refunds worth about $14 billion the previous year.
On the service side, the IRS saw continued strong growth in electronic filing by individuals, as the e-filing rate in FY 2012 exceeded 80% for the first time.
Taxpayer interest in online interactions continued to increase as well, with web page visits on IRS.gov up nearly 17% to 372 million.
IRS Individual, Business, Corporate Tax Audits – Affordable Tax audit Experts – Miami, Ft.Lauderdale, Palm Beaches
by Fresh Start Tax | May 16, 2013 | IRS Tax Audit
IRS Business Tax Audit, Former Managers/Agents – Affordable Local Audit Firm – Ft.Lauderdale, Miami 954-492-0088
Call the affordable tax firm that has been handling IRS business tax audits right here in South Florida since 1982 and are A+ rated by the Better Business Bureau. Free tax consultations.
If you have received a notice or letter from the Internal Revenue Service indicating that they plan to audit your business it only makes sense to contact a local tax firm to handle your IRS business tax audit.
It only makes more sense to hire former IRS agents and managers who are completely familiar with the system, the techniques, and the guides that will be used during your IRS business tax audit.
Our firm is comprised of tax attorneys, IRS tax lawyers, certified public accountants, enrolled agents and former IRS agents and managers with over 60 years of direct work experience in the local South Florida IRS offices.
We had been in private practice since 1982 right here in South Florida and are A+ rated by the Better Business Bureau. Our firm has over 206 years worth of professional tax experience in the area of IRS business tax audits.
Contact us today for a free initial business tax consultation and let us help take the fear and worry away from going through an IRS business tax audit.
Keep in mind if the IRS is auditing your business you can expect IRS to follow up in order your individual tax returns as well.
Your rights and Information about your Business Tax Audit with the IRS – What the IRS Promises. We will ensure your Tax rights.
Protection of your rights.
During your IRS Tax audit IRS employees will explain and protect your rights as a taxpayer throughout your contact with us.
Privacy and confidentiality.
The IRS will not disclose to anyone the information you give us, except as authorized by law. You have the right to know why we are asking you for information, how we will use it, and what happens if you do not provide requested information.
Professional and courteous service.
If you believe that an IRS employee has not treated you in a professional, fair, and courteous manner, you should tell that employee’s supervisor. If the supervisor’s response is not satisfactory, you should write to the IRS director for your area or the center where you file your return.
IRS Tax Representation.
You can either represent yourself or, with proper written authorization, have someone else represent you in your place.
Your representative must be a person allowed to practice before the IRS, such as an attorney, certified public accountant, or enrolled agent. If you are in an interview and ask to consult such a person, then we must stop and reschedule the interview in most cases.
You can have someone accompany you at an interview. You can make sound recordings of any meetings with our examination, appeal, or collection personnel, provided you tell us in writing 10 days before the meeting.
Payment of only the correct amount of tax.
You are responsible for paying only the correct amount of tax due under the law—no more, no less. If you cannot pay all of your tax when it is due, you may be able to make monthly installment payments.
Help with unresolved tax problems.
The Taxpayer Advocate Service can help you if you have tried unsuccessfully to resolve a problem with the IRS. Your local Taxpayer Advocate can offer you special help if you have a significant hardship as a result of a tax problem.
Appeals and judicial review.
If you disagree with us about the amount of your tax liability or certain collection actions, you have the right to ask the Appeals Office to review your case. You can also ask a court to review your case.
Relief from certain penalties and interest.
The IRS will waive penalties when allowed by law if you can show you acted reasonably and in good faith or relied on the incorrect advice of an IRS employee. We will waive interest that is the result of certain errors or delays caused by an IRS employee.
Examinations, Appeals, Collections, and Refunds
Examinations (audits). We accept most taxpayers’ returns as filed. If we inquire about your return or select it for examination, it does not suggest that you are dishonest. The inquiry or examination may or may not result in more tax. We may close your case without change; or, you may receive a refund.
The process of selecting a return for examination usually begins in one of two ways. First, we use computer programs to identify returns that may have incorrect amounts.
These programs may be based on information returns, such as Forms 1099 and W-2, on studies of past examinations, or on certain issues identified by compliance projects. Second, we use information from outside sources that indicates that a return may have incorrect amounts. These sources may include newspapers, public records, and individuals. If we determine that the information is accurate and reliable, we may use it to select a return for examination.
Publication 556, Examination of Returns, Appeal Rights, and Claims for Refund, explains the rules and procedures that we follow in examinations.
The following sections give an overview of how we conduct examinations.
- By mail. We handle many examinations and inquiries by mail. We will send you a letter with either a request for more information or a reason why we believe a change to your return may be needed. You can respond by mail or you can request a personal interview with an examiner. If you mail us the requested information or provide an explanation, we may or may not agree with you, and we will explain the reasons for any changes. Please do not hesitate to write to us about anything you do not understand.
- By interview. If we notify you that we will conduct your examination through a personal interview, or you request such an interview, you have the right to ask that the examination take place at a reasonable time and place that is convenient for both you and the IRS. If our examiner proposes any changes to your return, he or she will explain the reasons for the changes. If you do not agree with these changes, you can meet with the examiner’s supervisor.
Repeat examinations.
If we examined your return for the same items in either of the 2 previous years and proposed no change to your tax liability, please contact us as soon as possible so we can see if we should discontinue the examination.
IRS Appeals for Business Tax audits.
If you do not agree with the examiner’s proposed changes, you can appeal them to the Appeals Office of the IRS. Most differences can be settled without expensive and time-consuming court trials.
Your business appeal rights are explained in detail in both Publication 5, Your Appeal Rights and How To Prepare a Protest If You Don’t Agree, and Publication 556, Examination of Returns, Appeal Rights, and Claims for Refund.
If you do not wish to use the Appeals Office or disagree with its findings, you may be able to take your case to the U.S. Tax Court, U.S. Court of Federal Claims, or the U.S. District Court where you live.
If you take your case to court, the IRS will have the burden of proving certain facts if you kept adequate records to show your tax liability, cooperated with the IRS, and meet certain other conditions.
If the court agrees with you on most issues in your case and finds that our position was largely unjustified, you may be able to recover some of your administrative and litigation costs.
You will not be eligible to recover these costs unless you tried to resolve your case administratively, including going through the appeals system, and you gave us the information necessary to resolve the case.
IRS Tax Collections.
Publication 594, The IRS Collection Process, explains your rights and responsibilities regarding payment of federal taxes. It describes:
What to do when you owe taxes. It describes what to do if you get a tax bill and what to do if you think your bill is wrong. It also covers making installment payments, delaying collection action, and submitting an offer in compromise.
IRS collection actions. It covers liens, releasing a lien, levies, releasing a levy, seizures and sales, and release of property.
Your collection appeal rights are explained in detail in Publication 1660, Collection Appeal Rights.
Innocent spouse relief.
Generally, both you and your spouse are responsible, jointly and individually, for paying the full amount of any tax, interest, or penalties due on your joint return. To seek relief from any liability related to your spouse (or former spouse), you must file a claim on Form 8857, Request for Innocent Spouse Relief.
In some cases, Form 8857 may need to be filed within 2 years of the date on which the IRS first attempted to collect the tax from you.
If you are undergoing an IRS business tax audit contact us today for a free initial tax consultation and hear the truth about the IRS business tax audits. You do not need to be worried or scared or have fear set in.
We have handled hundreds of these business tax audits since 1982 and we can develop a strategy that you will be able to live with without fear.
Call the affordable professional tax firm that has been practicing in South Florida since 1982.
IRS Business Tax Audit, Former Managers/Agents – Affordable Local Audit Firm – Ft.Lauderdale, Miami
by Fresh Start Tax | May 16, 2013 | IRS Tax Audit
Miami, Ft.Lauderdale – Experienced IRS Tax Audit Firm – IRS Experts, Problems/Matters, Former IRS 954-492-0088
Visit our office for a no cost professional IRS Tax Audit Consultation.
If you have received a notice or letter from the Internal Revenue Service indicating that they may proceeding with an IRS tax audit call us today and speak to seasoned and experienced tax professionals who have handled hundreds of IRS tax audits right here in South Florida.
We have been in private practice right here in South Florida since 1982. We not only have worked in the local South Florida IRS offices but we have been engaged in client representation for close to 40 years. We completely understand the landscape of the local South Florida IRS offices and agents.
We are comprised of tax attorneys, IRS tax lawyers certified public accountants, enrolled agents, and former IRS agents, managers and supervisors.
While employed at the Internal Revenue Service we taught tax law.
We have over 60 years of direct work experience in the local South Florida IRS offices are familiar with all the procedures, all the protocols, and all the settlement strategies to get you the very very best results possible during an IRS tax audit.
Should you wind up owing any money as a result of your IRS tax audit we will be able to take the case to appeals and reach a tax settlement with the Internal Revenue Service.
Do not let a IRS notice or letter from indicating your tax audit worry, scare or bring anxiety to your life.
Being former IRS agents we understand the stress that this causes people so it only makes sense to hand this off to skilled tax professionals who’ve been practicing their craft since 1982.
We are A+ rated by the Better Business Bureau and are the affordable and trustworthy tax firm in South Florida. come by and visit our office does today for a free initial tax consultation. We want to make this process is easy and seamless for you as we possibly can.
What happens if I lost or have few Tax Record for my Audit
Many taxpayers come to us and have few tax records for their IRS audit and many have actually lost their tax records or they have been destroyed for various reasons. If that is the case, do not have any fear or worry because we can help you reconstruct those tax records so you can still take advantage of the deductions and expenses that you were so entitled to.
What is the scope of a IRS tax 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. In many cases IRS tax audits can finish up with no changes being made to your tax return.
If you want more information please read IRS Publication 556, Examination of Returns, Appeal Rights and Claims for Refund explains the audit process in more detail.
IRS Tax Audit Selection
Selecting a return for audit does not always suggest that an error has been made.
Tax Returns are selected using a variety of methods, including:
1. Random selection and computer screening – sometimes returns are selected based solely on a statistical formula.
2.Document matching – when payor records, such as Forms W-2 or Form 1099, don’t match the information reported. Over 1.4 million tax returns are audited every year as a result of mismatched reporting
3. 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.
What are the 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.
Many times if you are represented by a tax professional the IRS tax audit will happen in the office of the tax professional. It is never advised that an IRS audit take place in a taxpayer’s home or place of business.
The IRS Tax Audit Notification
Should your account be selected for audit, you will be notified in two ways:
1. By mail, or
2. By telephone, Generally the IRS auditor responsible for your case will make the telephone call.
In the case of a telephone contact, the IRS will still send a letter confirming the audit. E-mail notification is not used by the IRS. If you ever receive an email notification from the Internal Revenue Service you should immediately contact the IRS letting them know of this contact because they are usually sent by criminals or scam artists.
Your Rights During an IRS Tax Audit
Publication 1, Your Rights as a Taxpayer, explains your rights as a taxpayer as well as the examination, appeal, collection, and refund processes.
These taxpayers rights include:
1. A right to professional and courteous treatment by IRS employees.
2.A right to privacy and confidentiality about tax matters.
3. 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.
4. A right to representation, by oneself or an authorized representative.
5.A right to appeal disagreements, both within the IRS and before the courts.
What is the normal IRS Tax Audit Length
The length of each audit varies depending on the type of audit, the complexity of items being reviewed, the availability of information being requested, the availability of both parties for scheduling of meetings and your agreement or disagreement with the findings. As a general rule office audits are usually one or two day audits.
In the case of field audits they can last anywhere from two days to one year depending on the scope or complexity of the IRS tax audit. You want to make sure that you give all the information to the Internal Revenue Service that they need. In many cases the IRS can tell when the taxpayer is skirting the issues because the taxpayers lack of cooperation. By all means make sure you are cooperative with the IRS agent because they ultimately have your case in their hands and they can smell when something isn’t right.
Tax Records you may need to bring to a IRS Tax audit
You will be provided with a written request for specific documents needed. The Internal Revenue Service will always send out a detailed list of all the documents they need to close their tax audit. You should always understand that that audit list could be expanded as the audit continues.
The law requires you to retain records used to prepare your return. Those records generally should be kept for three years from the date the tax return was filed.
The IRS does accept some electronic records. If records are kept electronically, the IRS may request those in lieu of or in addition to other types of records.
Contact your auditor to determine what can be accepted to ensure a software program is compatible with the IRS’s.
IRS Tax Audit Determinations
An audit can be concluded in three ways:
1. No change: an audit in which you have substantiated all of the items being reviewed and results in no changes.
2.Agreed: an audit where the IRS proposed changes and the taxpayer understands and agrees with the changes.
3.Disagreed: an audit where the IRS has proposed changes and the taxpayer understands, but disagrees with the changes.
What Happens When You Agree With the Tax Audit Findings?
If you agree with the audit findings, you will be asked to sign the examination report or a similar form depending upon the type of audit conducted.
If money is owed, there are several payment options available. Publication 594, The IRS Collection process, explains the collection process in detail.
If you are going to go money to the Internal Revenue Service three options will exist to deal or settle your case with the Internal Revenue Service.
Based on your current financial statement the IRS will either place you into a currently not collectible status, ask you to make monthly installment payments or advise you that you are a tax settlement candidate.
What Happens When You DISAGREE with the 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.
Many of the different departments within IRS are responsible for making decisions concerning the application of tax law to various taxpayer issues. In some cases, agreement on these decisions, or determinations, cannot be reached. In other words, the taxpayer does not agree with the determination.
This is where Appeals comes in.
Appeals is independent of any other IRS office and serves as an informal administrative forum for any taxpayer who disagrees with an IRS determination. Appeals provides a venue where disagreements concerning the application of tax law can be resolved on a fair and impartial basis for both the taxpayer and the government.
The mission of Appeals is to settle tax disagreements without having to go to the Courts and a formal trial.
Miami, Ft.Lauderdale – Experienced IRS Tax Audit Firm – IRS Experts, Problems/Matters, Former IRS
by Fresh Start Tax | May 16, 2013 | IRS Tax Audit
Received Notice/Letter IRS Tax Audit – Experienced Audit Representation, Former IRS, Ft.Lauderdale, Miami 954-492-0088
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Received an IRS Notice/ Letter for a IRS Tax Audit, Here are some Facts
What is the scope of a IRS tax 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.
IRS Publication 556, Examination of Returns, Appeal Rights and Claims for Refund explains the audit process in more detail.
IRS Tax Audit Selection
Selecting a return for audit does not always suggest that an error has been made.
Tax Returns are selected using a variety of methods, including:
- Random selection and computer screening – sometimes returns are selected based solely on a statistical formula.
- Document matching – when payor records, such as Forms W-2 or Form 1099, don’t match the information reported.
- 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 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. Many times if you are represented by a tax professional the IRS tax audit will happen in the office of the tax professional.
The IRS Tax Audit Notification
Should your account be selected for audit, you will be notified in two ways:
In the case of a telephone contact, the IRS will still send a letter confirming the audit. E-mail notification is not used by the IRS. If you ever receive an email notification from the Internal Revenue Service you should immediately contact the IRS letting them know of this contact because they are usually sent by criminals or scam artists.
Your Rights During an IRS Tax Audit
Publication 1, Your Rights as a Taxpayer, explains your rights as a taxpayer as well as the examination, appeal, collection, and refund processes.
These taxpayers rights include:
- A right to professional and courteous treatment by IRS employees.
- 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.
IRS Tax Audit Length
The length of each audit varies depending on the type of audit, the complexity of items being reviewed, the availability of information being requested, the availability of both parties for scheduling of meetings and your agreement or disagreement with the findings. As a general rule office audits are usually one or two day audits. In the case of field audits they can last anywhere from two days to one year depending on the scope or complexity of the IRS tax audit.
Tax Records you may need to bring
You will be provided with a written request for specific documents needed. The Internal Revenue Service will always send out a detailed list of all the documents they need to close their tax audit. You should always understand that that audit list could be expanded as the audit continues.
The law requires you to retain records used to prepare your return. Those records generally should be kept for three years from the date the tax return was filed.
The IRS does accept some electronic records. If records are kept electronically, the IRS may request those in lieu of or in addition to other types of records.
Contact your auditor to determine what can be accepted to ensure a software program is compatible with the IRS’s.
IRS Tax Audit Determinations
An audit can be concluded in three ways:
- No change: an audit in which you have substantiated all of the items being reviewed and results in no changes.
- Agreed: an audit where the IRS proposed changes and the taxpayer understands and agrees with the changes.
- Disagreed: an audit where the IRS has proposed changes and the taxpayer understands, but disagrees with the changes.
What Happens When You AGREE With The Audit Findings?
If you agree with the audit findings, you will be asked to sign the examination report or a similar form depending upon the type of audit conducted.
If money is owed, there are several payment options available. Publication 594, The IRS Collection process, explains the collection process in detail.
If you are going to go money to the Internal Revenue Service three options will exist to deal or settle your case with the Internal Revenue Service.
Based on your current financial statement the IRS will either place you into a currently not collectible status, ask you to make monthly installment payments or advise you that you are a tax settlement candidate.
What Happens When You DISAGREE with the 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.
Received Notice/Letter IRS Tax Audit – Experienced Audit Representation, Former IRS, Ft.Lauderdale, Miami
