by Fresh Start Tax | Jan 25, 2013 | IRS Tax Audit
IRS Tax Audits – Tax Audit Representation – Former IRS Agent Representation 1-866-700-1040
Call for free tax consultation today.
If you have received an IRS notice or letter that your income tax or your business tax return is to undergo an IRS audit call us today and speak directly to tax attorneys, CPAs, or former IRS agents.
Our professional staff is comprised of former IRS agents, office auditors, revenue agents, former IRS managers, and former IRS appeals agents who have over 60 years of direct work experience at the IRS and the local, district, and regional offices of the Internal Revenue Service.
We can handle and negotiate any tax audit of any size and should you wind up owing any money to IRS we can work out a tax settlement for you.
Do not be afraid of an IRS tax audit.
Our former IRS agents you know all the tax strategies and tax positions of the Internal Revenue Service and we will be able to minimize any difficulties or problems that may arise.
Being former IRS instructors we have trained former IRS agents and therefore know the strategies to get you the best possible results.
So, What is an IRS audit?
An IRS tax audit is a review or 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 audits about 1% of all tax returns.
The IRS Publication 556, Examination of Returns, Appeal Rights and Claims for Refund explains the audit process in more detail or you can contact our office today and we can go over other details and options with you.
The IRS Tax Audit Selection
Selecting a return for audit does not always suggest that an error has been made. however about 75% of the time changes are made after the tax audit.
Tax Returns, both business and personal 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. These type of tax audits are usually handled through mail correspondence. There are approximately 1.4 million audits handles this way.
Related Tax Audit Examinations.
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 audit. Generally if a revenue agent from the Internal Revenue Service is auditing a company’s tax return they will many times find personal adjustments that have to be made on returns.
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 Agent, group or mail correspondence office will tell you what records are needed. Tax Audits can result in no changes or changes. Any proposed changes to your return will be explained by follow-up letters and notices.
Audit Notification
Should your tax return be selected for a tax audit, you will be notified in two ways:
1. By mail or,
2. By telephone
In the case of a telephone contact, the IRS will ALWAYS send a letter confirming the audit.
E-mail notification is not used by the IRS.
Should you ever get an email notification regarding a tax audit we can tell you definitively this is a tax scam and should be reported to Internal Revenue Service
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 tax audit 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 d. will happen if the requested information is not provided.
e. A right to representation, by oneself or an authorized representative.
f. 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. Office audits usually last about a month and tax audits from revenue agents can last anywhere from two months to two years depending on the complexity of the case.
Tax Records that may be Needed
IRS will provide with a written request for specific documents needed. IRS also reserves the right to make other documents available as it’s going through the tax audit.
The law requires you to retain records used to prepare your return.
Length of time tax record need to be kept
Generally, tax records 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. A tax 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.
AGREE With The Audit Findings
If you agree with the IRS 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
If money is owed, there are several payment options available. Publication 594, The IRS Collection process, explains the collection process in detail.
As a general rule IRS will ask for a financial statement before determinations are made of how paying back taxes are determined.
IRS will ask for a current financial statement with complete documentation. As a general rule IRS will either put your case in an economic tax hardship, ask for an installment agreement, or may recommend or consider you for an offer in compromise.
Once again your current financial statement will dictate the closing method that IRS will use.
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.
IRS Tax Audits – Tax Audit Representation – Former IRS Agent Expert Representation
by Fresh Start Tax | Jan 15, 2013 | IRS Tax Audit
IRS Audit – Individual, Business, Payroll – Local Former IRS Agents – Miami, Ft.Lauderdale, Palm Beaches, Key West 954-492-0088
If you were under a current tax audit or received a notice that a current tax return is under IRS Audit investigation call Fresh Start Tax LLC today. We can resolve your IRS Audit problem.
We know the system.
We are comprised of Local Tax Attorneys, CPAs, enrolled agents, and former IRS agents.
As former IRS agents we work as managers and instructors in the local South Florida IRS offices.
We have over 60 years working specifically in the South Florida area and we are aware of all the tax policies, tax codes and tax settlement formulas that can get you tax relief for an IRS tax audit. Whether you are an individual, business or you have a payroll or employment tax audit we can help.
You can call us today for a free consultation and come and visit our offices speak specifically to a tax audit specialist. 954-492-0088
We’ve been in private practice since 1982 and one we are one of the most experienced tax audit firms in South Florida.
Why the IRS audits tax returns
The IRS is committed to provide America’s taxpayers top-quality service by helping them understand and meet their tax responsibilities and enforce the law with integrity and fairness to all.
Employment Tax Audits
In Employment Tax, IRS will maintain the integrity of our current tax system while reducing the Employment Tax Gap through implementation and recommendation of legislative changes, enforcement, education, and outreach.
The tools to accomplish the task include:
a. Front-end compliance,
b. Increasing the number of Voluntary Agreements,
c. Continuation and expansion of Federal and State partnerships,
d. Adoption of an Enterprise-wide approach to resources,
e. Pursuit of automation to improve return classification systems,
f. Addressing the broad range of noncompliance,
g. Eliminating/reducing overlaps and gaps in current processes and procedures,
h. Use of research to better understand the tax gap and assess possibilities for impacting taxpayer behavior,
i. Modifying the compliance environment through legislation, regulation, or other systemic changes, and
j. Ensuring that all remuneration subject to employment tax is reported.
The voluntary compliance rate.
The percentage of total tax revenues paid on a timely basis for tax year 2006 is estimated to be 83.1 percent. The voluntary compliance rate for 2006 is statistically unchanged from the most recent prior estimate of 83.7 percent calculated for tax year 2001.
The tax gap is largely in line with the growth in total tax liabilities. Some growth in the tax gap estimate is attributed to better data and improved estimation methods.
The IRS developed a new econometric model for estimating the tax gap attributable to small corporations which was then applied to newer operational data. Also, large corporation tax gap estimates for 2006 are based on improved statistical methods and updated data.
Finally, the data related to individual income taxpayers continues to improve based on improved estimation techniques and newer data.
The tax gap can be divided into three components:
1. non-filing,
2. under reporting and
3. underpayment.
As was the case in 2001, the under reporting of income remained the biggest contributing factor to the tax gap in 2006.
Under-reporting across taxpayer categories accounted for an estimated $376 billion of the gross tax gap in 2006, up from $285 billion in 2001.
Tax non-filing accounted for $28 billion in 2006, up from $27 billion in 2001.
Underpayment of tax increased to $46 billion, up from $33 billion in the previous study.
Overall, compliance is highest where there is third-party information reporting and/or withholding.
Most wages and salaries are reported by employers to the IRS on Forms W-2 and are subject to withholding.
As a result, a net of only 1 percent of wage and salary income was misreported. But amounts subject to little or no information reporting had a 56 percent net misreporting rate in 2006.
It appears that IRS is willing to spend significant funds to go after those in this gap.
IRS will be targeting those areas such as:
1. non-filers,
2. worker classification,
3. officer compensation,
4. fringe benefits,
5. tip Income reporting, and
6. payment of amounts due.
IRS wants to encouraging Voluntary Compliance
The IRS recognizes the significant benefits that can accrue from working with taxpayers to understand problems and practices unique to a given industry. Voluntary compliance will improve if taxpayers understand their tax obligations.
Tax Compliance is achieved when a taxpayer makes a diligent effort to meet the requirements of the law.
The law requires that the taxpayer take affirmative action to meet his/her legal obligations. Sometimes the taxpayer takes sufficient action to meet the requirements of the law but, because of some unforeseen intervening event, is unable to do so.
Affirmative action recognizes that the obligation to comply with the law is ongoing and requires that the taxpayer continue to attempt to meet the requirements of the law.
IRS Audit – Individual, Business, Payroll – Local Former IRS Agents – Miami, Ft.Lauderdale, Palm Beaches, Key West
by Fresh Start Tax | Dec 25, 2012 | IRS Tax Audit
IRS Tax Audit – Most Common Types of Tax Audits – Former IRS Managers, Agents – Fresh Start Tax LLC – Tax Audit Representation
We are comprised of Tax Attorneys, IRS Tax Lawyers, CPA’s and Former IRS agents and managers. We are a local New Jersey Firm. The Affordable Firm.
We have worked hundreds and hundreds of IRS and Sales Tax audits. We are tax experts in Tax Audit Representation. 1-866-700-1040.
We are over 205 years of total tax experience and over 60 years of direct IRS work experience. We know all the policies and procedures for tax audits due to our extensive background with the IRS.
Should have any questions regarding an IRS tax audit contact us for a no cost professional consultation 1-866-700-1040.
Facts about IRS Tax Audits:
- The IRS audits a total of 1,391,581 tax returns a year,
- IRS is hiring 15,000 new IRS Agents under the new IRS budget,
- The IRS field agents complete more than 310,000 audits by office or business visits a year,
- IRS prosecutes over 3000 taxpayers a year for tax crimes,
- The IRS completes over 1,081,152 correspondence audits a year,
- IRS has installed new software tracking systems with the development of the CADE 2 computer to spot and recognize tax audits more proficiently.
The most common type of IRS Tax Audits
1. Front End Loaded Planning Time ( see below for a explanation )
The planned direct examination staff years and the number of return closures are front end loaded into the plan. These resources are allocated, after consideration of work in process, prior to committing resources available to other compliance initiatives.
The planned direct examination staff years and the number of case closures are front loaded into the plan. The objectives and time allocated may change from fiscal year to fiscal year.
Examples of front end loaded time are as follows:
1. Abusive Tax Avoidance Transactions,
2. Coordinated Industry Case (CIC) time,
3. Compliance Assurance Process (CAP) time,
4. Joint Committee,
5. National Research Program ,
6. Protection of Revenue Base ,
7. Compliance Initiative Projects,
8. Outreach Programs.
The most common of all tax audits is the DIF Audit.
Each tax return that is filed with the IRS is graded with a DIF number. A DIF score is a grade that your tax return receives when compared to other tax returns which is similar to yours. The higher the DIF and high your chance for a IRS tax audit.
You will never know your DIF, it is reserved for IRS personal only. A label with a DIF score is placed on your return by machine.
Discriminant Index Function (DIF) Overview
DIF as referenced in IRM 4.19.11.1.4, Sources of Returns for Classification, is a mathematical technique used to score income tax returns for examination potential.
These formulas were developed based on available NRP data. Each return measured under DIF receives a DIF score.
Generally, the higher the score, the greater the audit potential. The highest scored returns are made available to Examination upon request.
DIF mathematical formulas are confidential and for official use only. The DIF score assigned to a return should not be disclosed.
Types of DIF Returns Scored by the CADE 2 Computer of the IRS.
The following types of returns are computer scored under the DIF System:
a. Individual,
b. Corporation,
c. S Corporation,
d. Partnership,
e. Fiduciary.
Call us today to have the very best chance for a tax audit defense. 1-866-700-1040.
IRS Tax Audit – Former IRS Agents, Managers – Essex, Morris, Bergen, Passaic, Union – New Jersey – Tax Audit Representation
by Fresh Start Tax | Dec 10, 2012 | IRS Tax Audit
Have former IRS Agents and Managers who know the system keep IRS in check.
We have over 60 years of direct IRS work experience in the local, district and regional offices of the IRS.
Call us for a no cost consultation 1-866-700-1040. We are affordable and trustworthy.
On staff are former IRS Appeals Agents who have worked thousands of IRS tax audit cases.
Do not be alarmed if you have been audited by the IRS. If you have nothing to worry about it is okay that you go into the IRS on your own. If you have doubts call us and we will give you a free opinion on your individual case.
Facts and General Information about IRS Tax Audits:
- The IRS audits a total of 1,391,581 tax returns a year.
- The IRS field agents complete more than 310,000 audits by office or business visits a year.
- The IRS completes over 1,081,152 correspondence audits a year.
- IRS has installed new software tracking systems with the development of the CADE 2 computer to spot and recognize tax audits more proficiently
- There is a 1% chance you will get audited by the IRS
IRS Tax Audit
An IRS audit is a review or examination of an organization’s or individual’s accounts and financial information to ensure information is being reported correctly, according to the tax laws of the US to verify the amount of tax reported on the tax return is accurate and correct.
The IRS Publication 556, Examination of Returns, Appeal Rights and Claims for Refund explains the full tax audit process in much more detail.
The Tax Audit Selection Process
Selecting a tax 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. 1.3 million audits are conducted this way each and every year.
3. Related examinations.
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 audit.Also other States may ask the IRS to look into tax issues and cases where they believe suspicious activity may be present.
While these are only three methods there are usually 12 different methods employed by the IRS to pull returns for audits.
Tax Audit Methods
An tax audit may be conducted by mail or through an in-person interview and review of the taxpayer’s records.
The interview may be at an IRS office (office audit) or at the taxpayer’s home, place of business, or accountant’s office (field audit).
The IRS will tell you what records are needed. Audits can result in no changes or changes. Any proposed changes to your return will be explained.
IRS Tax Audit Notification
Should the IRS select you for audit, you will be ONLY two ways you will be notified:
1. By mail or,
2. By telephone
In the case of a telephone contact, the IRS will still send a letter confirming the tax audit. E-mail notification is never used by the IRS.
Your Rights During an 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 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.
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.
Tax Records Needed
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.
Fresh Start Tax LLC will work out a settlement agreement is you will owe funds to the IRS so do not be worried. We have settled thousands of cases since 1982.
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.
IRS Tax Audits – Tax Audit Defense – Former IRS Managers, Agents – IRS Tax Audit Representation 1-866-700-1040
by Fresh Start Tax | Dec 8, 2012 | IRS Tax Audit, New Jersey Tax, Sales Tax
IRS & Sales Tax Audits – Audit Experts – Attorneys, Lawyers, Former IRS – Essex, Morris, Bergen, Passaic, Union – New Jersey
Stop the worry. Get a no cost professional tax consult and learn how we can end your misery. 1-866-700-1040.
We have worked for the IRS and worked on joints tasks on Sales Tax Audits from both sides of the fence.
We know the procedures and techniques and can you get you results. We have over 60 years with the IRS as Agents, Managers, and Instructors.
We are affordable and friendly and get you results.
IRS Tax Audits.
There are several different types of IRS tax audits.
1. Mail correspondence.
The most common type of IRS tax audit is the mail correspondence audit. IRS audits about 1.5 million taxpayers through mail correspondence. These usually occur as a result of 1099 and w-2 mismatches. IRS collects billion of dollars through these tax audits.
2. DIF.
The high DIF score is the second most common way. The DIF score or the discriminatory index function score tax audit means your tax return fell out of the National Standards for various credits, expenses or something did not make sense on your tax return. Each tax return has a DIF score.
The computer will self generate these score and tax audits.
3. Random sample audit. You won the IRS lottery and IRS will use your tax audit results to set up future DIF scores. this is a bad news audit.
4. National Program Audit.
IRS runs market specialization programs in different areas in the country for different industries. IRS tries to audit all industries to set National Standards. There is list on our website for market specialization tax audits.
6. The Office Audit.
You will get a letter to appear in a local IRS office where a local office auditor will audit selected features of your IRS tax return. These are small and quick tax audits.Many times these are only two or three item audits.
7. The Field Audit.
A more high skilled IRS Revenue Agent will spend days combing through your records. These are more advanced and complicated tax audits conduct at your home, place of business of at your representatives office.
State of New Jersey Tax Audits
The State of New Jersey audits taxpayers to:
1. Enforce New Jersey tax laws uniformly,
2. Deter tax evasion,
3. Promote voluntary compliance,
4. Educate taxpayers.
While the State of New Jersey accept most tax returns as filed, they audit some returns to verify accuracy and evaluate compliance.
Sales Tax Audits do not always result in the taxpayer owing additional tax, penalty or interest. The sales tax examiner auditor may adjust a credit carryover or correct distribution without assessing additional tax.
The auditor sometimes may even determine that a refund is due.
How Are you Selected for Audit?
The methods for selecting a business or individual to audit vary from tax to tax.
Here are some examples of sources the State sometimes uses to identify a potential audit candidate:
1. Internal Revenue Service information.
2. Information sharing programs with other states and state agencies.
3. Computer-based random selection.
4. Analysis of Florida tax return information.
5. Business publications, periodicals, journals, and directories.
What types of records will you need to provide?
When the State notifies you of our intent to audit they will also tell you what records you will need to provide.
Some types of records may include, but are not limited to:
a. General ledgers and journals
b. Cash receipt and disbursement journals
c. Purchase and sales journals
d.Sales tax exemption or resale certificates
e. Florida tax returns
f. Federal tax returns
g. Depreciation schedules
h. Property records
i. Other documentation to verify amounts entered on tax returns
IRS & Sales Tax Audits – Audit Experts – Attorneys, Lawyers, Former IRS – Essex, Morris, Bergen, Passaic, Union – New Jersey
by Fresh Start Tax | Dec 5, 2012 | IRS Tax Audit
We are a professional tax firm that specializes in IRS tax issues and tax problems.
We have over 205 years of professional tax experience and over 60 years working directly for the internal Revenue Service.
If you have any questions regarding a IRS Tax Audit call us for a no cost professional tax consultation and speak directly to a tax professional.
There are several types of IRS tax audits.
1. Mismatches.
The most common type of IRS tax audit is the mail correspondence audit. IRS audits about 1.5 million taxpayers through mail correspondence. These usually occur as a result of 1099 and W-2 mismatches. The IRS collects billions of dollars a year on this type of tax audit.
Taxpayers should be aware that IRS matches up W-2’s and 1099 on each 1040. The CADE 2 computer system systemically does this.
2. DIF Scores.
The high DIF score is the second most common way IRS audits tax returns. The DIF score or the discriminatory index function score tax audit means your tax return fell out of the National Standards for various credits, expenses or something did not make sense on your tax return. Each tax return that registers a high DIF score is reviewed by a tax examiner for IRS audit potential.
The computer will self generate these scores and tax audits.
3. Random sample audit.
You won the IRS lottery and IRS will use your tax audit results to set up future DIF scores. A random sample audit means that the IRS will audit your whole tax return. THIS IS BAD NEWS.
4. National Program Audit.
IRS runs market specialization program in different areas in the country for different industries. IRS tries to audit all industries to set National Standards.
6. The Office Audit.
You will get a letter to appear in a local IRS office where a local office auditor will audit selected features of your tax return. These are small and quick tax audits. Many times IRS will audit up to 5 items om your tax return.
7. The Field Audit.
A more high skilled IRS Revenue Agent will spend days combing through your records. These are more advanced and complicated tax audits conduct at your home, place of business of at your representatives office. Many times these audits can last up to 40 hours.
If you have simple issues and you have nothing to worry about we recommend you handle the IRS tax audit yourself. If you have any skeletons in the closet make sure you are represented.
8. Referral audits. ( Collection Division )
As the IRS is completing a collection investigation the Revenue Officer will spot issues that will call for a closer look because of possible audit potential. Be friendly to the IRS agent.
9. Machine Generated IRS Audit.
This is a new type of tax audit whereas the IRS Cade 2 system pulls the return for a tax audit.
IRS TAX AUDITS – DIFFERENT TYPE OF IRS TAX AUDITS – TAX AUDIT DEFENSE – FORMER IRS
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