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Tax Audits and Appeals Archives

Debunking some common myths about tax audits

When many people imagine a tax audit, they picture shadowy IRS agents combing through tax returns to seize upon every tiny flaw. This misconception couldn’t be further from the truth. No one looks forward to a tax audit, but the process is not necessarily as painful as you may think. To demystify the process, let’s take a look at some common myths—and facts—regarding tax audits.

When an Ohio company is subjected to a sales tax audit

For Ohio business owners, there are a variety of situations that can be very alarming ones. Among these is their company receiving an Audit Commencement Letter. This can mean that the state’s Department of Taxation will be performing a sales tax audit on their company.

What might trigger an audit?

Sometimes an audit happens by chance, but in many other cases, it happens because of some sort of discrepancy that the IRS discovers in your tax filing. It can be extremely stressful to be audited when you have put many hours into sorting all your paperwork and counting and recounting your figures. An audit can cause an individual to feel frightened and question the accuracy of their filing.

For taxes, accuracy matters

One of the most important elements of tax planning and preparation is recordkeeping. While this may seem the epitome of the routine and mundane, you must realize that it may be one of the most important parts of asserting any claim or defense, should the Internal Revenue Service or the Ohio Department of Taxation challenge your tax filings for a given year.

For FATCA Streamlined compliance, answer carefully

The Foreign Account Tax Compliance Act (FATCA) has been in effect for more than two years. The law, which has revolutionized tax compliance for American citizens with overseas accounts, was passed in 2010. During that time, the IRS has been extraordinarily successful in wringing compliance with its disclosure requirements from foreign banking and investment institutions. With the help of the Justice Department, the IRS has settled cases with these banks and those banks have paid settlements of nearly a billion dollars.

No substitute for experience with taxes

The tax code is very large and complex. That is no surprise to anyone who has seen the volumes of the tax code in a law office or a library. And it is no surprise that understanding how it works and how all of the parts fit together is a lifetime's occupation. If you have any situation that starts to become complex, it will necessarily produce complex tax returns.

Six reasons why you might get audited

A tax audit sounds like everyone's worst nightmare. An IRS audit can take years and thousands of dollars. Although there is no perfect equation that will result in a tax audit, there are certain red flags that will raise your chances of getting one. If you find yourself nodding along to one or more of the items below then you might expect an IRS audit in your future.

Implausible deniability

During the Regan administration, certain incidents raised questions that had overtones of the Watergate Scandal, involving "what did the President know and when did he know it?" Certain members of the administration noted that the president was not informed of some operations as a means of providing him "plausible deniability." This was employed to prevent a reoccurrence of the Watergate issues that took down the Nixon presidency.

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