Protecting Your Rights In Tax Audits And Appeals
The thought of being audited by the Internal Revenue Service can strike fear into the hearts of everyone from a first-time tax filer to a seasoned professional. What you need to know is that the outcome of your audit will have a lot to do with how well your perspective is represented. It is in your best interest to have an experienced tax lawyer on your side. You cannot afford to go it alone.
At Mockensturm, Ltd., we offer individuals and businesses in Toledo, Ohio, and the surrounding communities skilled legal representation from dual professionals. Our staff includes both attorneys and CPAs who are intimately familiar with our nation’s tax laws and understand how to minimize the impact audits have on our clients.
To schedule a consultation, please call us at 419-792-1143 or complete our contact form. Our tax attorneys and CPAs serve clients throughout the Toledo area and all of northern Ohio.
Experienced Attorneys For Tax Appeals And Audits
The truth is, if you are being audited, you likely will owe something at the end of the process. But our team has been proven effective at minimizing the damage. We are strong advocates for taxpayers and focus on controlling the process. We are also experienced litigators, and we will not hesitate to fight for you in court if doing so serves your interests.
People place themselves at a distinct disadvantage when they work directly with the tax auditors. These auditors are trained professionals who know how to find information that is harmful to taxpayers and beneficial to the IRS’ position.
Unfortunately, sometimes the tax authorities are just plain unreasonable. If an appeal is in your best interest after going through the audit process, you do not have to find a new firm to represent you. We have the resources and expertise to take your case to tax court and achieve a successful outcome that blunts the damage from your audit so you can move forward to a better future.
If you are facing a business tax audit, please see our Business Tax FAQ to learn more.
What Is An IRS Tax Audit?
Audits tend to sound much more intimidating than they are. However, you should still take them seriously. A tax audit is when the IRS examines the tax documents of an individual or an organization to ensure that the information reported is accurate and the amount of taxes paid is correct. They are also checking to make sure the auditee complied with federal tax law.
The Employee Retention Credit And IRS Audits
The Employee Retention Credit (ERC) was a refundable tax credit that provided crucial financial assistance for small businesses to make up for revenue lost during the pandemic. It was essentially used to sustain the economy and encourage businesses to keep employees on payroll during the height of the COVID-19 pandemic. Many businesses were only able to retain crucial employees and continue operations with the help of funds provided by the ERC. Businesses were eligible for the ERC if their operations and revenue were impacted by the government pandemic shutdown orders, such as commerce, travel and group meetings.
Unfortunately, this financial assistance program was abused during a time of civil unrest. Many businesses did not receive financial aid because others exploited the program. The IRS is scrutinizing ERC claims to ensure that businesses are not exploiting the system. Businesses that benefited from the ERC but did not qualify are likely to receive an ERC audit.
An ERC audit is used to examine a business’s eligibility and compliance for financial assistance. These audits are random and targeted to ensure a broad spectrum of businesses are thoroughly examined. A business may become a target of an IRS audit for many reasons, such as:
- Incomplete, incorrect or inconsistent information
- Excessive credits
- History of noncompliance
Businesses may have also unknowingly worked with ERC firms, falsely promoting the credit to ineligible employers. Nonetheless, failing an ERC audit can lead to fraud and expensive penalties.
When a business receives an ERC audit, the notice should specify the type of audit and the necessary steps to take. The audit intends to clarify how a business was eligible for the ERC. It is important to prepare for an ERC audit by collecting financial records, tax returns, and other supporting documents showing that a business is eligible for credit. A review process will take place after this information is submitted. A tax attorney can help review the details of an ERC audit and provide help to resolve the issue.
The IRS Will Contact You Via Mail About A Tax Audit
Scammers will do anything to take advantage of you, including sending out false notices of a tax audit to get your personal information. Signs of a scam include:
- Demanding payment immediately
- Telling you to give credit or debit card numbers over the phone
- Asking for a wire transfer or prepaid gift card
- Threatening to contact the police
- Misspellings or incorrect information
Do not reply to any emails, texts, social media inquiries or phone calls about an audit. The IRS contacts you via mail if it decides to audit you. If you do receive a notification from the IRS in the mail, go to the IRS’s official website, call its help number and confirm that you are being audited.
Why Am I Being Audited?
It is common to wonder why the IRS would single you out for an audit. Audits can happen to anyone or any business entity. Some common reasons for an audit include:
- Random selection
- Failure to report income
- Errors on your tax return
- Several losses reported
- Numerous charitable donations
- Numerous business deductions
- Employment as an independent contractor or freelancer
Your notice of an audit will have information about why the IRS chose to audit your returns.
What Can A Tax Lawyer Do About An IRS Audit?
Your attorney will make sure that the IRS does not violate any of your rights. They will also help you understand what to expect from the auditing process, including how to gather the necessary documentation to provide the IRS. They will communicate with the IRS representative for you. If necessary, a tax attorney can also defend you in court or negotiate a tax payment plan.
What Happens During An IRS Tax Audit?
In an audit, you can expect the following process:
- Receive notice from the IRS
- Respond with certain requested documents by the deadline stated in the notice
- IRS completes a report with their findings
- Receive notice of the findings and accept or appeal the findings within 30 days
A typical audit takes two to three months. You do not necessarily have to accept the findings of an audit. If you disagree, you can file an appeal in which you challenge the IRS’ results. This gives you time to try to reach an agreement about the purported tax deficiency.
Possible Outcomes Of An Audit
The auditor could find that your tax return was correct and had no deficiency. However, they could also find that you owe outstanding taxes. This often includes a penalty of 20% to 40%. In rare cases, the IRS may find evidence of criminal activity and prosecute you for a federal tax offense. An audit may also prompt the IRS to revisit you and audit you again in the future.
Being Audited For Your Income Taxes Or Business Taxes? We Can Help.
You have no time to waste if you are facing an audit. Rather than waiting for the deadline, it is in your best interest to contact us as soon as possible for an initial consultation. Our Toledo IRS audit attorneys are here to help you.
Contact Mockensturm, Ltd. Today
Our attorneys and CPAs are known for providing effective solutions for clients facing a wide variety of tax issues. To set up a consultation regarding your specific situation, please call us at 419-792-1143 or complete our contact form. We advise and represent individuals and businesses in Toledo and throughout northern Ohio.