Receiving an IRS audit notice is scary. Most who receive an audit notice automatically assume they’re accused of wrongdoing, or that they have somehow filed their returns incorrectly. This is not always the case. You may have been randomly selected for an audit by an automated program which compares your returns to others in similar circumstances. You may have also been selected for an audit due to errors or disagreements with other taxpayers, such as clients, business partners, or investors. Regardless of the reasons for your selection, it is best to get legal and financial advice from an experienced attorney and CPA. Barlow Tax Solutions will help you organize your documents, file properly, and respond to any inquiries appropriately.
IRS audit notices are generally sent within three years of the problem, though this is not always the case. If a significant problem is discovered, the audit may be delivered as many as six years after.
Once you receive an IRS audit notice by mail, the Service will provide instructions about how to proceed. The audit may be conducted by mail or through an in-person meeting. In either case, you will be required to produce documentation about your financial position, past returns, information about your business (if applicable), tax forms such as 1099s, and other documents. The IRS will request other documents from you on IRS Form 4564.
With these forms filed, the IRS will make a determination on your case. If all your documents are accurate and your taxes were filed correctly, no further action will be taken. If the IRS determines that a change should be made (for example, not enough taxes were paid), you can either agree or disagree. If you agree, you must make the change and pay any fines or penalties. If you disagree, you can see an IRS manager or file an appeal.
If the error or disagreement is relatively simple, the audit may not take long. However, if the problem is complex and requires substantial documentation to prove or disprove, it may take some time. In either case, whether you are dealing with an audit on your personal taxes or your business taxes, a tax professional can help. We can help you organize the documents you need, file those documents correctly, look for tax opportunities, and negotiate with the IRS when needed. If you are not working with a tax professional at this stage, negotiating with the IRS can be difficult.
An IRS audit means the Service is taking a closer look at your personal or business taxes. In some cases, taxpayers have filed correctly, but a documentation or calculation error was overlooked by the IRS. In this case, upholding your position without professional help can be very difficult. This is where a tax attorney or CPA specializing in tax code will help. Similarly, if only a minor filing error was made but it has resulted in huge penalties and fines, it is best to seek professional representation. Though a taxpayer can represent themselves and their own interests in the case of an IRS audit, it is not recommended. When your finances are under a microscope, it is best to work with experienced professionals to uphold your case and protect your rights.