An audit or examination is an IRS review of your books, receipts, and records. Unlike in other areas of the law, the IRS thinks you’re guilty until you prove your innocence. Because the auditor or examiner will have a detailed understanding of tax law, you will want to strongly consider hiring a tax attorney to not only level the playing field but be able to preserve the strength of your case should you be unable to reach an agreement with the IRS. Because a tax attorney has oversite of your case at the audit stage, that same attorney can represent you in tax court, should the need arise.
What Triggers an Audit or Examination?
Returns are selected for audit or examination in a number of ways — some that you can control and some that you can’t. Some selection is simply random. Other returns are manually pulled when your tax return doesn’t match your 1099s, W-2s, or other statements that the IRS has in its records. Others are selected based on computer scoring of how closely your income and expenses and other tax items match similar returns.
What Happens in an Audit or Examination?
There are different types of audits or examinations. The first is by correspondence where you will be asked to send additional documents to the IRS and the audit is conducted back and forth with correspondence between the examiner and the attorney. You may also be asked to come to a local IRS office for an in office audit. If you run a business, the IRS may also come to your office to perform an on-site audit.
We can help you gather your records and prepare for the interview so the Examiner sees the supporting information he or she needs. We also anticipate the issues and prepare the legal arguments ahead of time so that most, if not all issues, are settled during the audit, not after, which saves you time and money.
IRS Automated Under Reporter Notices
This is not a formal audit but it is still a notice that may require attention. If you miss reporting an income item on your return, whether accidentally or intentionally, the IRS will send you a notice with the proposed corrections. Many times these income items do not take into consideration deductions, exemptions or elections that would otherwise reduce or eliminate the taxable income. We can assist you in preparing a response to ensure that the IRS does not improperly assess you tax and the associated penalties and interest.
To schedule a consultation with an experienced tax attorney who has represented individuals and businesses in audit and examinations, contact Orlando Tax Law.