by Fresh Start Tax | May 15, 2013 | IRS Tax Audit
Miami – IRS Tax Audit Representation – Former IRS Managers/Agents Tax Audit Experts, Affordable 954-492-0088
If you are going to experience an IRS tax audit and need professional tax representation there is no better persons to hire an former IRS agents and managers who know the system and work right here in the South Florida IRS offices.
We have over 60 years of working directly for the Internal Revenue Service in the local South Florida IRS offices.
We have worked as IRS auditors, IRS revenue agents, IRS appellate agents, IRS supervisors and have taught tax law at the Internal Revenue Service.
We are a full service tax firm and all work done in-house. We represent various law firms and CPA firms whose clients have IRS problems. We have been practicing right here in South Florida since 1982.
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Come and see us for an initial tax consultation and we can fully review your potential IRS tax audit and handle any appellate work or tax settlement should you will money.
Do not be bullied by the Internal Revenue Service hire experience and trust all for affordable fee pricing.
Common questions and answers asked by clients and taxpayers
- 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. If the IRS is has sent you a notice of an IRS tax audit the last thing you want to do is file an amended tax return. That is a huge red flag for the IRS agent.
- 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 IRS audit manager can accept the return or assign the return to an auditor.
The assigned IRS Tax 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 IRS Tax 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. there are general to types of in person IRS tax audits.
The first is called an IRS office audit which obviously occurs inside the IRS office and the second is a more complicated and complex IRS tax audit is conducted by an IRS revenue agent, that usually takes place of business or at the tax professional’s office
- Can you request the IRS tax 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 IRS Tax 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. If the IRS feels the tax audit is being moved to delay matters the Internal Revenue Service will not change locations.
- 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 tax records be kept?
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 IRS Tax 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.
If you live in the Miami area and you are looking for IRS tax audit representation contact us today for a free initial tax consultation.
We are the affordable tax experts who have been in private practice in South Florida since 1982.
Miami – IRS Tax Audit Representation – Former IRS Managers/Agents -Tax Audit Experts, Affordable
by Fresh Start Tax | May 14, 2013 | IRS Tax Audit
Tax Audit IRS – Audit Representation, Former IRS Audit Agents, Ft. Lauderdale, Miami, Palm Beaches 954-492-0088
We are comprised of former IRS agents, managers and tax instructors that worked out of the South Florida IRS offices for over 60 years.
We worked in the local, district, and regional tax offices of the Internal Revenue Service.
We have handled a countless number of IRS Tax Audits as former IRS agents in the local South Florida tax offices and in private practice. We are IRS tax audit specialists.
We have worked as office auditors, revenue agents, and former IRS appellate agents as well as supervisors and managers in the local IRS offices.
Also on staff tax attorneys, certified public accountants and enrolled agents for all your tax needs. We are a full-service office and all our work is done in-house. We are used by other tax firms to handle their IRS tax problem because of our expertise and specialty in South Florida.
If you are going through a IRS tax audit from the IRS and need tax audit representation you will be best served always by hiring a former IRS agents and managers who knows the exact process and tax defenses are available to you as you are going through a tax audit from the Internal Revenue Service.
Contact us today for a free initial consultation and see if we can minimize your pain and problem you are going through as a result of a tax audit from the Internal Revenue Service. We are tax audit representation specialists
IRS Tax Audit Information
IRS audits 1.1% of all personal income tax returns.
If you won the IRS audit lottery you should never go into IRS unrepresented for an IRS audit. As a former IRS agent seeking good professional tax will in the long run save you aggravation, grief, stress and keep money in your pocket in the long run.
If you have received an IRS letter or notice that you are going to undergo an IRS tax audit is in your best interest to call former IRS agents and managers who know all of the protocols, techniques and tax defenses to best defend your tax return that is undergoing an IRS tax audit.
Why were you selected for a IRS Tax Audit
U.S. taxpayers have always wondered how and why they were selected for an IRS Tax Audit.
The IRS audits over 1.4 million tax returns by correspondence mail every year . The more money you make the greater chance of an IRS audit.
The answer may seem overly simple, but most people do not have knowledge of the audit process. The DIF score is one of the primary factors for a tax audit by IRS.
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 IRS tax audit escalates.
The highest scoring tax returns are then forwarded to an IRS Examiner for further review. These examiners work at the regional tax offices of the Internal Revenue Service and do their grading right at the IRS Service Center.
Each tax return has a DIF score on it and the highest DIR scores go to these IRS tax examiners who work on location for the IRS.
So what triggers a high DIF Score?
Falling out of the National Average Guidelines in the areas of:
1.Charitable Contributions,
2.Casualty Losses,
3.Home Office,
4.and Travel & Entertainment will affect the tax return’s DIF Score.
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.
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 Proposed Budget, the IRS has increased appropriations again to increase resources for the Enforcement Division.
This includes investigations, examinations and collections.
If are an in need of assistance for an upcoming IRS audit, please contact the Tax Resolution Specialists at Fresh Start Tax LLC.
Tax Audit IRS – Tax Audit Representation, Former IRS Audit Agents, Ft. Lauderdale, Miami, Palm Beaches
by Fresh Start Tax | May 14, 2013 | IRS Tax Audit
Being Audited by the IRS – IRS Tax Audit Help – , Former Agents – Miami, Ft.Lauderdale, Palm Beaches 954-492-0088
If you are being audited by the Internal Revenue Service and need IRS tax audit help it only makes sense to hire former IRS agents who were office audit, revenue agents, former managers and former IRS appeals agents in the local South Florida IRS offices.
With over 60 years of direct working experience in the local South Florida Internal Revenue Service office, we are tax experts in IRS tax audit help.
We have worked in the local, district, and regional offices of the Internal Revenue Service.
We have also scored individual and business tax returns at the regional tax offices of the Internal Revenue Service and know the exact process of why and how tax returns are selected for tax audit so it only makes sense that we could help defend your tax return.
If you will wind up owing money as a result of being audited by the Internal Revenue Service we can go ahead and work out a tax settlement as well so do not be worried by an IRS audit letter. We have resolved hundred and hundreds of IRS audits over the years.
Selecting a return for a IRS Tax Examination if you are being Audited by the IRS.
Selecting a return for examination does not always suggest that the taxpayer has either made an error or been dishonest. In fact, some 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.
Taxpayer Rights if you are being Audited by the IRS
The IRS trains its employees to explain and protect taxpayers’ rights throughout their contacts with taxpayers.
These IRS audits 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.
How Returns Are Selected fora IRS Tax Audit 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.
Some 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.
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. Over 1.4 million tax returns are selected on income matching IRS tax audits.
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. Usually partnership and corporate tax returns are the most heavily related spinoff tax examination audits.
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. The IRS specific market segment tax audit is usually conducted by an IRS revenue agent who was highly trained and skilled in a particular area of expertise dealing with one or two specific industries. These are very sharp and intelligent IRS auditors and some of the most highly trained.
Being Audited by the IRS – IRS Examination Methods
An 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.
Appeal Rights – IRS Tax Audit Appeal Help
IRS 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.
Being Audited by the IRS – IRS Tax Audit Help – Miami, Ft.Lauderdale, Palm Beaches
by Fresh Start Tax | Apr 2, 2013 | IRS Tax Audit
IRS Tax Audit – Former IRS Agents – Jacksonville, Tampa – Florida Representation 1-866-700-1040
If you are going to undergo an IRS tax audit you cannot have better tax representation than former IRS agents, managers, and IRS tax instructors. Our firm is equipped with former agents at all levels of Internal Revenue Service including the appeals division in where all on unagreed IRS tax audits go.
If you are looking for excellent professional tax representation for an IRS tax audit look no further than in your very state.
Call us today for free tax consultation and we will advise you on the current state of your IRS audit and can offer you the best possible tax defense against the IRS.
Tips for Hiring a Firm for IRS Tax Audit Defense
1. Should you decide to hire professional tax help, I urge everyone, hire a professional tax firm that have multiple tax professionals on staff.
Many times, partners kick around issues so you have at least two people looking at your case.
Also, if your main tax representative is sick or has other issues, there is someone else to pick up the slack.
Professional tax firms usually have one or two tax professionals assigned each case.
2. If you handle your own audit and a revenue agent is working your case, never meet at your business if you can help it. Meet at a neutral site.
If you have the IRS Tax Audit at your place of business, other employees or client/customers many feel something is wrong and start asking a lot of questions.
Keep it private.
Even though this sounds like such a commonsense idea you’d be surprised as a former IRS agent how many people invited me into their homes and businesses.
I was both shocked and amazed.
3. Make sure you contact the IRS Agent or Auditor promptly and meet all deadlines.
IRS Agents many times are graded on how fast cases are closed. If you slow the process up for them, you may by at the wrong end of their wrath. Also from a delay tactic make sure that never appears that you are purposefully or wrongfully trying to avoid closing out the are IRS tax audit.
4. Be completely prepared and organized for the audit.
The IRS audit letter will address issues the IRS is looking at. Make copies of documents and never give the IRS original documents. The more organized you look is a great sign you have done the right things. Have photocopies available for the IRS agent with explanations that cover all possible deductions and expenses.
5. If a tax liability is going to be owed always appeal. Many times the Supervisor does not want to have your case go to appeals and may come back and make an audit adjustment. Also if you are going to owe money it’ll give you an opportunity to go ahead and collection plan your case.
6. If you have lost your records and you are going to go to appeals.
If you have to go to appeals, try to obtain documents or reconstruct tax records where a third party appeal agent may look at and think, ” I will allow this, it makes sense.” Reconstructed records can fly with the IRS. many people believe that since their tax records are unavailable IRS will not allow them during the course of an IRS tax audit.
IRS still uses common sense to handle the tax audit. By reaching out to a professional who can instruct you in IRS tax audit reconstruction can save you a lot of time and money.
7. Bring only documents requested and nothing else. This often times limits the scope of the investigation.
8. Do not bring prior year’s returns. If the IRS finds adjustments to the years they are looking at, they may want to go back further and will let you know.
9. If the audit is taking place at the beginning of a tax year do not file that year’s return. Put it on extension. If you do not, the IRS may pull the year for a tax audit.
10. Hire the most experienced tax firm you can find. Make sure they have Former IRS Agents on staff.
11. Never lie to the IRS, enough said.
IRS Tax Audit – Former IRS Agents – Jacksonville, Tampa – Florida IRS Audit Representation
by Fresh Start Tax | Mar 21, 2013 | IRS Tax Audit
IRS Audit – Ft.Lauderdale, Miami, West Palm – Former Local IRS Agents 954-492-0088
You can hire Former Local IRS agents and managers who worked at the local IRS for a combined 60 years.
IRS audits 1.1% of all personal income tax returns.
If you won the IRS audit lottery you should never go into IRS unrepresented for an IRS audit. As a former IRS agent seeking good professional tax will in the long run save you aggravation, grief, stress and keep money in your pocket in the long run.
If you have received an IRS letter or notice that you are going to undergo an IRS tax audit is in your best interest to call former IRS agents and managers who know all of the protocols, techniques and tax defenses to best defend your tax return that is undergoing an IRS tax audit.
We have represented thousands of clients before Internal Revenue Service and we have worked out of the local South Florida offices for over 60 years. We have also worked on the district and regional offices as managers and instructors.
Call our offices today and we will give you a free tax consultation and go over your IRS tax audit options.
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.
IRS Audit – Ft.Lauderdale, Miami – Former IRS Agents, Managers – Tax Audit Defense
by Fresh Start Tax | Feb 25, 2013 | IRS Tax Audit
Miami, Florida Keys – IRS Audit & Representation Former IRS, Agents, Managers 954-492-0088
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Our firm has over 205 years of professional tax experience and we are comprised of tax attorneys, certified public accountants, enrolled agents and former IRS agents.
We are A+ rated by the Better Business Bureau we are fast and we are affordable. We are one of the most experienced tax firms in South Florida.
General IRS audit information
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, IRS 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.
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 Subchapter S corporations. Rates exceeded 20% for the largest corporations.
What is an IRS audit
An IRS audit is a review/examination of an business, organization’s or individual’s accounts and financial information to ensure information is being reported correctly, according to the tax laws, to verify the amount of tax reported is accurate.
IRS Tax Selection Methods
Selecting a return for audit does not always suggest that an error has been made. 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.
3. Related examinations. When 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.
Audit Notification
IRS Tax Audit Notification, either by
1. By mail, or
2. By telephone
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.
Your Rights During an Audit
You can find your legal rights in Publication 1, Your Rights as a Taxpayer, explains your rights as a taxpayer as well as the examination, appeal, collection, and refund processes.
These rights include:
a. A right to professional and courteous treatment by IRS employees.
b. A right to privacy and confidentiality about tax matters.
c. 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.
d. A right to representation, by oneself or an authorized representative.
e. 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.
Records Needed for IRS Tax Audit
You will be provided with a written request for specific documents needed.
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.
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 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.
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.
Regarding IRS Tax Enforcement and Other Information
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.
Miami, Florida Keys – IRS Audit & Tax Representation – Former IRS, Agents, Managers
