So IRS revenue officers are field collection agents and they spend about fifty percent of the time in the field going after taxpayers and/or chasing their assets. So if a revenue officer shows up your home or place of business, understand you’re not obligated to talk to the revenue officer.
rs-irs-audits
What Are the First Steps I Should Take in an IRS Audit?
The first steps you should take in the audit are to gather your documents and to understand your risk. The first thing that we look at when we have a prospective client come into the firm is why we think the returner got audited. Every return tells a story and it’s only a matter of time before we go through the return and learn what that story is. In speaking with taxpayers what we often find is that people either lack
What Does the IRS Audit Process Look Like?
The taxpayer will then gather that information and will meet with the auditor.
What Are IRS Auditors Looking for When They Audit a Return?
The IRS is comparing the return that was filed versus the substantiation that you’re providing and matching.
How Long Does an IRS Audit Usually Take?
The problem is is that most taxpayers get audited have some sort of adjustment.
Do I Have to Provide All the Documentation the Auditor Is Requesting?
For the auditor to perform his task he will require all the documents which he will request. Read the blog to now why and how it will help.
Can I Go to Jail for Errors on My Income Tax Returns?
Yes you can! With the caveat stated that most people do not go to jail because of errors on the return, criminal prosecutions take willfulness. There has to be some deliberate action on your part to mess up the return or to conceal income or hide expenses in some way. If there’s no evidence of willfulness, prosecution is probably not likely but in the course of the investigation, the auditor is looking for things called badges of fraud. They’re looking for evidence that you manipulated the numbers on your return in order to lower your taxable liability. If the errors are serious enough, it’ll trigger a referral to the Criminal Investigation Division of the IRS. So while the chances of jail are not exactly likely, if you’ve got a serious error on the return and you suspect willfulness it can and will trigger a criminal referral which is something that you don’t want to deal with.
What Are the Types of Penalties That I Could Face in the Audit?
So the penalty structure in an audit is really rangy and it can range anywhere from a five percent penalty all the way up to a seventy five percent penalty depending on the conduct and the course of dealing during the audit and how the material is presented. The most common penalty is the negligence penalty which is about 20 percent. If at all possible you want to avoid that negligence penalty and knock this thing down to an accuracy penalty which is about 10 percent. An accuracy penalty is usually the best case scenario because the accuracy penalty is mandatory for adjustments that are $5,000 or more in tax. Generally speaking with most of our clients, although we try and get them out with flying colors, there’s usually some reason that the IRS has audited another return. So a $5,000 adjustment is usually not out of the ordinary; however, we’ll do everything that we can during the course of the audit to mitigate any penalties. For more serious cases, the goal in the audit is to mitigate the civil fraud penalty which is a 75% penalty. In addition to the 75% penalty on top of the tax that you owe, civil fraud prevents certain resolutions within IRS collections. That’s why it’s really important to avoid the stigma of fraud going forward in your IRS matter.
What Does the IRS Appeals Process Look Like?
So IRS appeals is supposed to be an independent body that is neutral and that’s designed to resolve disputes with the IRS prior to going to tax collections. In reality Appeals is staffed with a bunch of former auditors and a bunch of former collection agents however we’ve had a lot of positive experiences in the course of Appeals in this firm so I like dealing with appeals. I find the appeals process is generally fair and impartial and generally yields a pretty good result depending on the circumstances. Now the good news with appeals is that the auditor is not involved in the process at all. The auditor has taken
What Happens If I Owe Money at the End of an IRS Audit?
The liability and fault you couldn’t work out a payment plan or you can go in collections.