Ft.Lauderdale – IRS Tax Audit Help & Representation – Former IRS – IRS Audit Expert 954-492-0088
We are comprised of tax attorneys, CPAs, and former IRS agents, managers and instructors.
We work out of the local South Florida offices for over 60 years. We also worked out of the district and regional offices of the Internal Revenue Service and Tax Law to the new IRS agents.
As a result of our years of IRS experience we know every position that IRS takes during a tax audit.
We know all the strategies, policies and all the procedures used by Internal Revenue Service and know all the applicable tax defenses used when applicable in these cases.
Call us today and here the truth about your IRS tax audit.
Why you may have been selected for a IRS tax audit
1% of all tax returns are audited by the Internal Revenue Service. The higher income you make the greater potential of a tax audit. most all tax returns are selected for audit by the CADE 2 computer, the IRS beast.
Tax returns are selected for audits in several ways.
The most common method is through the DIF process.
The primary way that the IRS selects returns for audit is the Discriminate Function (DIF) system. Every tax return has a DIF score. The DIF system uses mathematical formulas to weigh the various characteristics of tax returns and score them accordingly, in an effort to find the returns that would most likely have a difference between taxes owed and reported. IRS uses revenue agents and tax examiners to then look over every tax return that has a high DIF score to verify that a particular tax return has audit potential.
Most of these agent are very trained a very proficient in picking up in tax returns that are deserving of an IRS tax audit.
We have a revenue agent on staff that used to classify tax returns at the IRS Service Center.
An example of this
for example, if an individual earns $60,000 in a year and makes a charitable contribution of $6,000, that characteristic would more than likely carry a higher weight than it would for an individual who had $700,000 in income and made that same charitable contribution; the first return would receive a higher score.
As a general rule, the higher the score, the higher the probability of a tax change, the highest scoring returns are then forwarded for further review to a tax examiner.
At the current time IRS is trying a new process called “machine learning audits”. It is a process where no IRS agent looks at the return it just sends to the field the tax returns for audit.
The IRS is going to engage the system for a year then look at the results and determine the worthiness of these of the system
There is another way that tax returns can be selected for further examination
The National Research Program
In this NRP program, the IRS conducts examinations to gather data for use throughout the IRS in an effort to improve the tax system.
Tax Returns are randomly selected, yes randomly selected, to allow the IRS to collect statistically valid information about how taxpayers meet their taxpaying responsibilities.
These tax audits are generally more thorough than the so-called regular types of audits because of their basis in research. Many professionals call least tax audits, the audits from hell because many times the IRS will audit every single item on the tax return.
IRS will use these tax return results to set up national standards for DIF scores mentioned above.
IRS Matching Programs
Under this type of audit the IRS would match various reporting documents, such as Forms 1099 for dividends or interest, with the income reported on the tax return.
If there is a mismatch or a missing amount, the IRS will contact the taxpayer for more information. The taxpayer must then respond to the IRS with an explanation of the difference or an agreement to pay the amount due.
IRS audits approximately 1.4 million taxpayers as a result of mismatches through the matching program.
Billions of dollars are collected as a result of these matching programs.
Record keeping for the Taxpayers
Keep good records. Good records will help you monitor the progress of your business, prepare your financial statements, identify source of receipts, keep track of deductible expenses, prepare your tax returns, and support items reported on tax returns.
What kinds of records should I keep?
You may choose any record keeping system suited to your business that clearly shows your income and expenses.
Except in a few cases, the law does not require any special kind of records.
However, the business you are in affects the type of records you need to keep for federal tax purposes.
How long should I keep records?
The length of time you should keep a document depends on the action, expense, or event the document records.
You must keep your records as long as they may be needed to prove the income or deductions on a tax return. As a general rule IRS requires you keep your tax records for three years.
How long should I keep employment tax records?
You must keep all of your records as long as they may be needed; however, keep all records of employment taxes for at least four years.
How should I record my business transactions?
Purchases, sales, payroll, and other transactions you have in your business generate supporting documents. These documents contain information you need to record in your books. His best to keep copies of these in a safe place just in case some unexpected event takes place or your records are destroyed. Copies can be with your accountant or in safety deposit boxes.
What is the burden of proof?
The responsibility to prove entries, deductions, and statements made on your tax returns is known as the burden of proof.
You must be able to prove (substantiate) certain elements of expenses to deduct them.
Keep in mind that if you ever lose your tax records a good tax firm can help reconstruct both and your deductions.
Ft.Lauderdale – IRS Tax Audit Help & Representation – Former IRS – IRS Audit Experts
