IRS EXAMINATIONS / AUDITS
Why It’s Important to Get Professional Assistance
The IRS has way too many tricks up its
collective sleeves. And they are looking for you to step into their traps.
In addition, many of the front-line representatives simply DON'T know the
law, and so they try to convince you that they are always right. We know you
think professional help is expensive. But if you think help is expensive,
wait 'til you see how expensive NO HELP is!
Why you were audited
Something (or multiple
things) were outside the "normal range" on your return. –
Most audits are to verify one small part of your return, rather than
everything that is there. Perhaps you gave 40% of your income to charity or
you deducted unreimbursed mileage showing you drove 300,000 miles last year.
Your Tax
Preparer is Under Investigation – There are some "bad eggs"
out there and the IRS wants to stop them. Tax preparers that tell you that
you can deduct 100% of your home by using it as a "home office", or
deducting mileage in situations where it's highly unlikely, or taking a
"slavery reparations credit" are some of the scams the IRS is looking to
stop. Typically the tax preparer has a history of filing the same bogus
items hundreds or thousands of times. The IRS will then audit EVERY return
that preparer has signed in hopes of finding a pattern of illegal behavior.
Random Bad
Luck – The least likely reason you were audited comes from a
random selection of returns. In fact, the IRS only audits a very small
portion of taxpayers this way. However, the IRS is just wanting to check its
accuracy in finding tax cheats by taking a random sample of taxpayers, and
this just wasn't the lottery you wanted to win.
You are in a
"targeted" group -- The IRS targets specific types
of taxpayers, particularly those in businesses that handle a lot of cash or
that are in businesses where there has historically been a lot of tax
cheating. Such businesses include bars, barbershops, auto repair facilities,
and more. Fortunately for taxpayers, the IRS actually has a manual of how
they audit these groups and as tax professionals, we get to read the book,
too.
You were
turned in by an informant -- One of the ways the IRS catches
cheats is when their enemies turn them in to the IRS. Now the IRS is pretty
smart in knowing that over 95% of all cases that are referred to them are as
a result of some sort of revenge. So sometimes the tips aren't so accurate.
But if someone has a grudge against you, beware that one of the neat ways to
get even is to have that enemy audited by the IRS.
How the IRS handles
your audit:
Like any matter where emotions run high,
the IRS works that situation to their advantage. When you don’t the law and
your rights, it's easy to be ticked into showing something or saying
something that will get you into deeper trouble.
So maybe you've decided to be "smart"
and not answer an audit "invitation." Now you're just asking for more
trouble because the IRS will simply disallow any deduction that you can't
provide proof for. You might as well just open your wallet and dump out your
money.
When you get a letter requesting
information or that you are being examined, the FIRST THING YOU MUST DO is
to call a tax professional! Don't wait until the due date or the audit date
because the IRS does not like to keep rescheduling appointments. Each
Revenue Officer has to work through a certain number of cases each month and
if your name is on one of those, he will do what is necessary to get that
case closed.
Correspondence Audits
(Audit by Mail)
Watch out for correspondence audits.
While they look simple, they can get you a big tax bill in a hurry. First of
all, anything you send to them, if not fully explained, can result in the
item being ignored. Since you can't be present to explain or defend your
situation, your documents have to be clear as to what they represent and how
it proves your case.
The initial letter gives you
approximately 30 days to respond to their query. Despite this deadline, the
IRS computers automatically respond 45 days after the first letter and
disallow all questioned deductions and propose a tax bill. Note that this is
a PROPOSED BILL and not an actual bill. Even if you sent back your reply a
week after you got the first letter, the IRS gets too much mail to read your
reply within the first 30 day window. So don't be surprised if you think
they ignored you--because they did!
If you did respond within about 60 days
of the first letter, the IRS will get around to reading your response about
6 weeks after you sent a reply. If they like your evidence, they will send
out a revised assessment. If not, they'll send a letter stating that the
original assessment was correct.
Even if the IRS assesses a tax on you,
you still have the right to appeal their decision. Keep in mind that the
appeals process is very specific and has short deadlines that are mandated
by law. There are NO EXTENSIONS on appeals, so you'd better know what you
are doing. This is why a tax pro is needed if you want help.
What WBTax Can Do To
Help
First and foremost: when you hire us to
handle your audit, you won't need to talk to the IRS directly again. When we
get your emotions out of this matter, we can get busy solving the real
problems. We know you don't like the IRS, but when IRS agents have to get
defensive, they are less likely to take your side. We have the experience
and the knowledge to handle all types of IRS situations, including those
where the Revenue Officer or field agent is truly not qualified or competent
to handle your case.
Second, we'll help organize your case so
that we can present the best defense before the IRS. With the IRS, you are
presumed guilty until you prove otherwise, so we have to work for you. Your
job is to gather all the information we request as quickly as possible.
In the rare cases that our clients have
been audited, we have successfully defended our client 100% OF THE TIME!
That's a 20 year track record that's impossible to beat. The only time we
have ever lost an audit is when our client did not tell us the truth when we
asked for it. Therefore, if you tell us the truth, we will fight tooth and
nail for you until we win!
Remember, you don’t need to talk to the
IRS. You don’t need to make excuses. But, you must take the first step. Call
our office and set up a confidential, no cost appointment and we’ll lay out
the simple steps for you to get back into compliance with the IRS.
