by Fresh Start Tax | Feb 14, 2014 | Tax Audit, Tax Help
How to Defend Yourself in a IRS Appeal Case
After many taxpayers get audited by the Internal Revenue Service they find themselves in a situation in which the government is asking for dollars above and beyond what seems fair.
After your audit with the IRS you have appeals rights. Many times the appellate officer is just trying to close his or her case without understanding your point. Be persistent.
Do not give up. Because you have an alternative dispute resolution options that few people know about.
Know the system so you can fight and win.
Alternative Dispute Resolution
Fast Track Settlement (Large Business and International Division Taxpayers)
Fast Track Settlement (FTS) offers Large Business and International Division (LB&I) taxpayers a way to resolve audit issues during the examination process in less than 120-days.
Working with LB&I and Appeals, taxpayers can use the settlement authority and mediation skills of Appeals to shorten their overall experience with the Internal Revenue Service.
FTS reduces the combined LB&I-Appeals process time by two years.
Fast Track Settlement (Small Business and Self-Employed Taxpayers)
Small Business/Self-Employed and Appeals have designed an alternative dispute resolution strategy for small business and self-employed taxpayers, called the SB/SE Appeals Fast Track Settlement.
The FTS program was designed to resolve audit issues during the examination process within a goal of 60 days from acceptance of the application in Appeals.
The process uses the settlement authority and mediation skills of Appeals.
SB/SE and Appeals has now expanded the program nationwide.
A taxpayer who is interested in participating in the SB/SE FTS, or who has questions about the program and its suitability for the taxpayer’s case, may contact the Examination or Specialty Program group manager.
To apply for the SB/SE FTS program, the taxpayer and the group manager need to submit Form 14017, Application for Fast Track Settlement, and the taxpayer’s brief, concise and soundly written response to the Service’s position.
Fast Track Settlement (Tax Exempt and Government Entities Taxpayers)
On December 1, 2008, Tax Exempt and Government Entities (TE/GE) and Appeals announced a Fast Track Settlement program for TE/GE taxpayers.
The program gives TE/GE taxpayers under examination by any of the five business units within TE/GE an opportunity to resolve their disputes within 60 days of acceptance into the program.
An Appeals officer trained in TE/GE issues will mediate the issues and, when necessary, utilize Appeals settlement authority to resolve the issues.
Announcement 2008-105, 2008-48 IRB 1219 explains the eligibility requirements and types of cases excluded from the program. TE/GE includes Employee Plans, Exempt Organizations, Indian Tribal Governments, Federal/State/Local Governments and Tax Exempt Bonds.
Fast Track Mediation (Small Businesses and Self-Employed Taxpayers)
Fast Track Mediation (FTM) gives Small Businesses, Self-Employed (SE/SE) taxpayers and the IRS the opportunity to mediate disputes through an IRS appeals officer, who acts as a neutral party.
In this program, most tax disputes are resolved within 40 days compared to several months though the regular appeal process.
IRS offers this new service designed to expedite case resolution on disputes that arise from examination or collection actions.
The IRS does not like to let people know about this process because it slows down cases in their inventory always understand you can appeal within the appeal.
Early Referrals
Taxpayers whose returns are under the jurisdiction of Examination or Collection may request the transfer of a developed but unagreed issue to Appeals.
Examination or Collection will continue to develop those issues not referred to Appeals. The early resolution of a key issue may encourage taxpayers and the Service to agree on other issues in the case.
Early referral can also be requested with respect to issues regarding an involuntary change in method of accounting, employment tax, employee plans and exempt organizations. Regular Appeals procedures apply, including taxpayer conferences.
Post Appeals Mediation
Mediation is available for certain cases that are already in the Appeals process only after Appeals settlement discussions are unsuccessful and, generally, when all other issues are resolved but for the issues for which mediation is being requested.
Mediation is a non-binding process that uses the services of a mediator, as a neutral third party, to help Appeals and the taxpayer reach their own negotiated settlement.
To accomplish this goal, the mediator will act as a facilitator; assist in defining the issues; and promote settlement negotiations between Appeals and the taxpayer.
The mediator will not have settlement authority in the mediation process and will not render a decision regarding any issue in dispute.
Arbitration
Arbitration is available for certain cases within Appeals jurisdiction that meet the operational requirements of the program.
Generally, this program is available for cases in which a limited number of factual issues remain unresolved following settlement discussions in Appeals. Appeals and the taxpayer will be bound by the arbitrator’s findings.
The arbitration procedure uses the services of an arbitrator either from Appeals or from an outside organization.
Simultaneous Appeals/Competent Authority
The simultaneous Appeals/competent authority procedure encourages taxpayers to request competent authority assistance and the participation of Appeals while a case is under the Examination Division’s jurisdiction. Revenue Procedure 2006-54 contains the competent jurisdiction.
Revenue Procedure 2006-54 contains the competent authority procedures. Section 8 of Rev. Proc 2006-54 specifies the circumstances under which the simultaneous appeals/competent authority procedure may be requested and describes the role of Appeals.
Contact us today for free initial tax consultation so you can learn how to defend yourself against an IRS tax audit or an IRS appeals case.
You will speak directly to tax attorneys, CPAs, or former IRS agents to review your situation and give you an honest opinion about your chances of success.
How to Help yourself in IRS Appeals Case – IRS Appeals Representation, Former IRS – IRS Audits
by Fresh Start Tax | Dec 20, 2013 | Tax Audit, Tax Help
Affordable IRS Tax Audit Help & Representation 954-492-0088
We are a local South Florida tax firm that has been representing taxpayers in South Florida since 1982.
We are composed of former IRS agents, managers, and teaching instructors. We have over 65 years of direct IRS work experience in the local South Florida offices.
While at the Internal Revenue Service we taught tax law to both new and seasoned IRS Agents.
If you are going through an IRS tax audit there is no better tax representation than you can get the people who actually know the systems, the protocols in the settlement formulas.
We understand when to settle or take the case to appeals or get out when the get news good. Each case is different and there are no two cases the same.
We are A+ rated by the Better Business Bureau.
Fresh Start Tax LLC, affordable professional tax firm
- We are comprised of former IRS agents and managers who worked right here out of the local South Florida IRS offices. Also on staff are Tax Attorneys and CPAs.
- We have a cumulative 206 years of professional tax experience and over 60 years of working right here in the South Florida IRS offices.
- We are one of South Florida’s most affordable and experienced professional tax firms.
IRS Facts for IRS Tax Audits:
- The Internal Revenue Service audits approximately 1.5 million taxpayers every year.
- 350,000 are field audits 1,350,000 are mail and correspondence IRS tax audits.
- IRS collects $10.2 million as a result of IRS Tax Audit examinations every year.
- IRS collects $ 5.27 million as a result of IRS audits for document matching programs.
- The most common IRS tax audit is the DIF tax audit. Those are tax returns that have fallen out of the national standards of income and matched expenses or deductions.
IRS Tax Audit Help – 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.
Your Appeal Rights
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.
You can call us today for free initial tax consultation and we should be able to predict the results that you will have on IRS tax audit.
If you are you owe back taxes as a result of an IRS tax audit, we will work out a tax settlement.
Call us for a free initial tax consultation and get the IRS tax audit help you need with experienced and affordable tax representation.
We are the fast, friendly and affordable South Florida tax firm.
IRS Tax Audit Help & Representation – Affordable Attorneys & Former IRS – Weston, Coral Springs, Plantation, Sunrise
by Fresh Start Tax | Oct 9, 2013 | Sales Tax, Tax Audit, Tax Help
Best Tax Audit Defense
We are experts in tax audit defense. With over 206 years of professional tax experience we are one of the most experienced tax audit firms in South Florida.
Why we are one of the South Florida’s best Tax Audit Defense Firms;
- We been representing clients since 1982,
- We are A+ rated by the Better Business Bureau.
- Our firm is comprised of tax attorneys, certified public accountants, enrolled agents.
- On staff, Former IRS Agents, Managers, Tax Instructors,
- Former IRS Appeals Agent
We have over 60 years of direct IRS work experience in the local, district, and regional tax offices of the Internal Revenue Service. We taught tax law at the Internal Revenue Service while employed there.
Also on staff are former IRS managers, IRS appellate agents and IRS teaching instructors.
If we do not like the decision of the local IRS Audit Agent, we appeal.
Sometime the best way to get a solid tax settlement is to go to IRS Appeals, the Agents have much more flexibility.
What Can IRS 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.
IRS 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.
Our Billing Tax Audit Defense
All our billing for tax audit defense is done on a flat fee basis.
Our firm does not hourly bill.Once we evaluate your case we will tell you exactly what the fees are up front so there is absolutely no guessing.
Professional Tax Practice:
- Same Day IRS Tax Representation
- Offers in Compromise or IRS Tax Debt Settlements
- Immediate Release of IRS Bank Levies or IRS Wage Garnishments
- Tax Relief from a IRS Bill, Letter or Notice of “Intent to Levy”
- IRS Tax Audits
- IRS Hardships Cases or Unable to Pay
- Payment Plans, Installment Agreements, Structured agreements
- Abatement of Penalties and Interest
- State Sales Tax Cases
- Payroll / Trust Fund Penalty Cases / 6672
- Filing Late, Back, Unfiled Tax Returns
- Tax Return Reconstruction if Tax Records are lost or destroyed
- Tax Defense Company, Best Tax Audit Defense
Our Firm Resume:
- Our staff has collectively over 205 years of Professional IRS Tax Representation Experience
- On staff, Board Certified Tax Attorney’s, IRS Tax Lawyers, Certified Public Accountants, Enrolled Agents,
- We taught Tax Law in the IRS Regional Training Center
- Former IRS Agents, Managers and Instructors with over 60 years experience in the local, district and regional IRS offices.
- Former State of Florida Tax auditor, Expert Florida Sales Tax
- Highest Rating by the Better Business Bureau “A” Plus
- Fast, affordable, and economical
- Licensed and certified to practice in all 50 States
- Nationally Recognized Veteran /Published Former IRS Agent
- Nationally Recognized Published EZINE Tax Expert
- As heard on GRACE 90.3 FM Monthly Radio Show-Business Weekly
We a local AFFORDABLE South Florida tax firm that has been offering experienced, successful and affordable tax on a tax audit defense for IRS and state tax matters. Call us today for free initial tax consultation.
Best Tax Audit Defense – IRS & State, The Affordable Experts – Miami, Ft.Lauderdale, Florida Keys – FLORIDA
by Fresh Start Tax | Jul 24, 2013 | Sales Tax, Tax Audit
Since the state of Florida does not want to raise taxes or start taxpayers paying personal income tax there is only one way to collect more money from taxpayers and that simply is by auditing their tax return.
As a general rule, a tax auditor is worth six times their salary in additional money to the State, so only makes sense for the Florida Department of revenue to conduct more and more tax audits.
For businesses that are going through sales or use tax audits you should know that the state of Florida provides tax audit information for specific types of businesses.
Taxpayers may use audit guides to help to understand sales tax issues likely to surface relating to the industry, and relevant laws, court cases, and other technical documents.
These are a very valuable tool.
You can call us today to learn more about a Florida Department of revenue sales tax audit.
We are a local South Florida tax firm that are tax experts and sales tax audits.
Available tax audit guides for given industries
1. Aircraft Dealer,
2. Boat Dealer,
3. Commercial Rental Guide
4. Construction / Real Property Contractor,
5. Convenience Store
6. Grocery Store
7. Hotel / Transient Rental Manufacturers
8. Motor Vehicle Dealer
9. Repair of Tangible Personal Property
10. Restaurants and Bars
11. Retailer / Wholesaler
12. Transportation
Why were you Audited by the Florida Department of Revenue
There are a variety of reasons why the Florida Department of revenue is pulling your tax return for a tax audit.
As a general rule the reasons are the following:
- Enforce Florida tax laws uniformly,
- Promote voluntary compliance,
Other Reason for Tax Audits
You should also know that many times they have received tips from disgruntled employees or customers. Many times these can lead to criminal enforcement. Be careful who knows your business.
Only one percent of all tax returns are audited by the Florida Department of revenue and much of that is due to a limited manpower.
The Florida Department of revenue tries to take the biggest and the largest offenders and make examples of those businesses or companies by making sure much presses written to ensure compliance from other taxpayers in the state of Florida.
The state of Florida audits some returns to verify accuracy and evaluate compliance. Audits do not always result in the taxpayer owing additional tax, penalty or interest.
The auditor may adjust a credit carryover or correct distribution without assessing additional tax. The auditor may even determine that a refund is due.
How Are Florida Taxpayers Selected for a Sales or Use Tax Audit?
The methods for selecting a business or individual to audit vary from tax to tax.
Here are some examples of sources the state of Florida use to identify a potential audit candidate:
1. Internal Revenue Service has provided various information that it feels a state of Florida should look at. Many times when the Internal Revenue Service picks up an audit for federal reasons and they find flagrant violations of tax laws they will notify the state of Florida. These are common practices among government agencies
2. Information sharing programs with other states and state agencies.
3. Computer-based random selection.
4. Analysis of Florida tax return information. there are certain standards used by the state of Florida in which taxpayers fall within the normal median ranges. Once taxpayers fallout of these ranges it notifies the computer will be reviewed by an agent were decision is made to conduct a tax audit.
5. Business publications, periodicals, journals, and directories. From time to time the state wants to make sure certain industries are within tax compliance of the Florida Department of revenue tax guides and will take a certain industries and widespread sales tax audits to find out trends. Many these audits come up no change.
What types of records will need to be provided?
When the state of Florida lets you know of their tax audit intent, they will also tell you what records you will need to provide.
The types of records may include, but are not limited to:
- General ledgers and journals
- Cash receipt and disbursement journals
- Purchase and sales journals
- Sales tax exemption or resale certificates
Record keeping for the State of Florida
You must keep your records for three years since an audit can extend back that far.
The Department may audit for periods longer than three years if you did not file, or filed a substantially incorrect return or payment. These are usually omissions of tax of over 25%. There are no statutes for criminal violations.
Make sure you Communicate and Meet Deadlines with the auditor.
Throughout the audit process, communication is vital.
After the State of Florida Department of revenue sends you a Notice of Intent to Audit Books and Records, the auditor will work with you to set a date to begin the audit. It is in your best interest not to miss any of the dates as many times the auditors gets evaluated on meeting deadlines.
The auditor will give you deadlines for providing information or documentation.
If you need additional time to prepare, or need to request a delay for other reasons, contact the auditor.
The auditor will make every effort to accommodate your requests. If you fail to respond or provide the requested information, we may issue an assessment and file a warrant based on the best available information.
After your State Sales Tax Audit
After your audit is complete, you can review the audit findings and proposed changes to your tax liability. The auditor will give you a copy of the work papers and explain your rights, including deadlines for filing protests.
What if I do not agree with the audit results?
If you do not agree with the audit assessment, you can:
- File a written informal protest with the Department of Revenue; or
- File a written formal protest by petitioning for review by the Division of Administrative Hearings or file an action in circuit.
Sales Tax Audit Help – Florida Department of Revenue – Audit Representation – Miami, Ft.Lauderdale, Palm Beaches
by Fresh Start Tax | Jul 23, 2013 | State of Florida, Tax Audit
The Florida Department of revenue will audit anything that moves.
Both the federal and the state governments are in need of money and revenue so taxpayers can expect all government agencies to ramp up their tax audit forces.
As a general rule, a auditor is worth six times their salary in additional money to the State, so only makes sense for the Florida Department of revenue to conduct more and more tax audits.
The state of Florida provides tax audit information for specific types of businesses.
Taxpayers may use them to help to understand sales tax issues likely to surface relating to the industry and relevant laws, court cases, and other technical documents.
These are a very valuable tool not only if you’re undergoing a tax audit but for any taxpayer who wishes to understand the mindset of the Florida Department of revenue
You can call us today to learn more about a Florida Department of revenue sales tax audit.
These businesses in which tax audit guides are available are the following:
- Construction / Real Property Contractor
- Hotel / Transient Rental Manufacturers
- Repair of Tangible Personal Property
Why were you Audited by the Florida Department of Revenue
There are a variety of reasons why the Florida Department of revenue is pulling your tax return for a tax audit. There is nothing wrong to ask the auditor why your tax return was pulled. As a general rule the reasons are the following:
- Enforce Florida tax laws uniformly,
- Deter tax evasion and criminal evasion,
- Promote voluntary compliance within the state of Florida,
You should also know that many times they have received tips from disgruntled employees or customers. I know you may find this hard to believe but spouses turn in the other spouse for the revenge factor
Many times these can lead to criminal enforcement. Be careful who knows your business.
Believe it or not most tax returns in the state of Florida are accepted as filed.
Only one percent of all tax returns are audited by the Florida Department of revenue and much of that is due to a limited manpower.
The Florida Department of revenue tries to take the biggest and the largest offenders and make examples of those businesses or companies by making sure much press and newspaper print is written to ensure compliance from other taxpayers in the state of Florida.
The state of Florida audits some returns to verify accuracy and evaluate compliance. Audits do not always result in the taxpayer owing additional tax, penalty or interest.
The auditor may adjust a credit carryover or correct distribution without assessing additional tax. The auditor may even determine that a refund is due.
How Are Florida Taxpayers Selected for a Sales or Use Tax Audit?
The methods for selecting a business or individual to audit vary from tax to tax.
Here are some examples of sources the state of Florida use to identify a potential audit candidate:
- Internal Revenue Service has provided various information that it feels a state of Florida should look at.
- Information sharing programs with other states and state agencies.
- Computer-based random selection.
- Analysis of Florida tax return information.
- Business publications, periodicals, journals, and directories. From time to time the state wants to make sure certain industries are within tax compliance of the Florida Department of revenue tax guides and will take a certain industries and widespread sales tax audits to find out trends. Many these audits come up no change.
What types of tax records will need to be provided to the Florida Department of Revenue?
When the state of Florida lets you know of their tax audit intent, they will also tell you what records you will need to provide. Make sure you have all the records they ask for.
The types of records may include, but are not limited to:
- General ledgers and journals
- Cash receipt and disbursement journals
- Purchase and sales journals
- Sales tax exemption or resale certificates
Requirement record keeping for the State of Florida, Department of Revenue
You must keep your records for three years since an audit can extend back that far.
The Department may audit for periods longer than three years if you did not file, or filed a substantially incorrect return or payment. These are usually omissions of tax of over 25%.
Make sure you Communicate and Meet Deadlines with the auditor.
Throughout the audit process, communication is vital.
After the State of Florida Department of revenue sends you a Notice of Intent to Audit Books and Records, the auditor will work with you to set a date to begin the audit. It is in your best interest not to miss any of the dates as many times the auditors gets evaluated on meeting deadlines.
The auditor will give you deadlines for providing information or documentation.
If you need additional time to prepare, or need to request a delay for other reasons, contact the auditor.
The auditor will make every effort to accommodate your requests. If you fail to respond or provide the requested information, we may issue an assessment and file a warrant based on the best available information.
After your Tax Audit
After your audit is complete, you can review the audit findings and proposed changes to your tax liability. The auditor will give you a copy of the work papers and explain your rights, including deadlines for filing protests.
Florida Department of Revenue Tax Audit – Sales Tax Audit Help
by Fresh Start Tax | Jul 11, 2013 | Tax Audit
You can hire or retain Former Local IRS agents and managers who worked out of the local South Florida IRS offices for a combined 60 years.
Stop the worry and anxiety, let former IRS agents and managers handle your tax audit.
We have represented thousands of South Floridians before the Internal Revenue Service. Let our experience work for you. Contact us for a free tax evaluation.
We are the affordable and friendly tax firm.
We have worked as agents, managers, teaching instructors, appellate agents and have even taught tax law at the Internal Revenue Service. We are affordable true tax experts for help with IRS tax audits.
If you are undergoing a tax audit in Miami , Ft.Lauderdale or the Palm Beaches it only makes sense to hire former government employees who know all the solutions, all the remedies, and all the different tax audit defenses to use for undergoing an IRS or state tax audit.
Also on staff are tax attorneys, tax lawyers, certified public accountants, and former appeals agents with the Internal Revenue Service.
We have been in private practice right here in South Florida since 1982 and we are A+ rated by the Better Business Bureau.
Come by and visit us for a free initial tax consultation
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.
Odds of a IRS Tax Audit
No adjusted gross income 3.42%
$1- $25,000 1.22
$25,000-$50,000 .73%
$50,000-$75,000 .83%
$75,000-$100,000 .82%
$100,000-$200,000 1%
$200,000-$500,000 2.66%
$500,000-$1,000,000 5.32%
1,000,000-$5,000,000 5.38%
$5,000,000-$10,000,000 20.75%
over $10,000,000
Some of the Reasons why IRS selected your tax return for an IRS audit
1. High income.Number one reason!
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.
Help for a IRS Tax Audit, Former IRS Agents – Miami, Ft.Lauderdale, Palm Beaches – Affordable
