No one wants to receive a notice from the Internal Revenue Service (IRS) of a tax audit. The prospect of IRS agents going over your financial records with a fine tooth-comb, looking for any discrepancy or mistake, is certainly an unpleasant prospect. And if they do find something that is incorrect, it could trigger an immediate need to pay the missing taxes and any penalties and interest that has likely accrued.
Worse, if the examination by the IRS finds what they believe to be wrongdoing, tax fraud or tax evasion, in addition to those base penalties and interests, you could be facing criminal tax charges, with potentially devastating penalties.
This worst-case scenario is unlikely for most taxpayers, but if you receive a notice of a tax audit, speaking with tax attorney about the situation sooner, rather than later, can help ensure that mistakes or errors are viewed as inadvertent and not willful violations of the tax code.
Because the IRS cannot examine as many returns as it once did, the Service now focuses on higher income taxpayers, based on the assumption that they are more likely to attempt to avoid taxes and if they do, the IRS can obtain a greater return for its investigatory dollars.
To make examinations more efficient, the IRS relies on technology to score returns. If your return has unusual deductions, you are likely to trigger this system. This means that if your deductions are outside the norm, you are more likely to be audited.
An IRS tax audit is not the end of the world. If you maintain the appropriate records, you would be able to demonstrate to the examiners the basis of your deductions. If they are disallowed, you can then decide if you need to pursue an appeal of that determination or pay the tax.
Yahoo.com, “Red flags that tempt the tax auditor,” Kay Bell, Bankrate, February 8, 2015
Are you ready to take the first step toward reaching your goals?
Contact us today to schedule a Initial Consultation with our Toledo, Ohio, attorneys.