The IRS has the legal right to audit any tax return it so chooses for any reason it chooses. The threat of an audit is what makes most taxpayers take seriously their obligation to comply with the letter of the law.
The odds of being audited are generally very low; therefore, if you get an IRS audit notice, you should take it very seriously. The IRS is required to have a good reason for selecting you for a tax audit.
It is probable that the IRS selected your return because its computer system scored it as having a high likelihood of inaccuracy and an IRS official reviewed it and decided that it should be examined.
What makes an IRS audit so frightening is that the burden of proof is on the taxpayer to show that he has included all of his taxable income and provided receipts for all of his tax deductions.
It is not enough that your return is accurate. You must be able to prove it is accurate. Contact us today for help.
If your return was selected and the conduct of the audit is not handled properly, the following might occur:
The presence of an attorney in the audit process will help you avoid making statements or presenting documents to the IRS that may cause the IRS to assess additional taxes, penalties or interest against you.
Because of these risks, it is highly recommended that you hire a qualified, experienced tax attorney or CPA or IRS enrolled agent to represent you in an IRS audit.
More important, by having a tax attorney involved early in the IRS audit process you are putting the IRS on notice that: a) you believe your tax return is correct as filed; and b) you are prepared to prove it in Tax Court if necessary.
With the possible exception of a few extreme masochists, nobody likes to be audited by the IRS. But it happens every day and it could happen to you. Here are The Pappas Group’s 10 tips for dealing with an IRS audit:
The IRS audited my 2007 and 2008 tax returns and disallowed 100% of my business expenses because the auditor said I didn’t have sufficient records. I hired The Pappas Group and they were able to prove by other means that my deductions were valid and the IRS ended up only disallowing about 15% of my expenses. Had I not hired Pappas I would been assessed taxes, penalties and interest in excess of $100,000. The Pappas group now does all of my accounting work and prepares both my business and personal tax returns.
The IRS put a lien on my assets and said I owed it more than $70,000. I hired Pappas and he prepared and filed my delinquent tax returns, got the IRS debt reduced to less than $10,000 and got the lien released. The Pappas Group did what they said they would do.