Reasons for being selected for an IRS Tax Audit.
The IRS and State Revenue divisions choose to audit tax returns intentionally and randomly.
All businesses owners must file informational returns to IRS stating the amount paid to their employees and independent contractors. The IRS takes all this information and matches it with your tax returns. If a third-party filed tax information on you to the IRS, and you then failed to report that income when you filed your taxes, you will likely receive a letter from the IRS Automated under Reporter Program.
If your adjusted yearly gross income is above $200,000, the chance that you will be audited rises sharply.
These are some of the reasons; however there are numerous other reasons for being selected for a tax audit.
What is an IRS Tax Audit process and results?
The IRS (or State Auditors) examines your tax return to uncover any under reported income or outstanding balance of unpaid taxes. You will be requested to provide documents proving certain information on your tax return. Examining a tax return does not automatically mean that you have to pay any additional taxes or penalties. However, Depending on the deficiency or the amount of unpaid taxes, your tax return can be subject to additional tax interests, civil fraud penalty, or criminal penalty. The amount and the type of tax audit penalties will depend on the severity of the deficiency found in your tax return. It is important that the taxpayer and auditor are not in direct communication with each other. Therefore, an experienced tax professional should be in charge of the information that is communicated between you and the agent.
Appealing an IRS Tax audit
The IRS has set up an Office of Appeals which consists of approximately 2,000 employees located nationwide. It is an independent organization within the IRS that helps taxpayers resolve their tax audit disputes through an informal, administrative process. Appealing an Audit can often reduce or eliminate previously assessed taxes and penalties. The odds of winning a case in the Office of Appeals are surprisingly high. If you are confident that the IRS auditor was very harsh with unfair additional taxes and penalties, it is advisable to immediately file for an appeal. One should be aware that the right for filing for an audit expires no more that 30 days after receiving the audit report letter.
Rarely do our clients have to talk with the IRS. We handle it all for you so that you don’t need to take time off to handle the bureaucracy and paperwork of the IRS. We fight hard for our client’s rights. If needed, we file and assist in appealing the tax auditor’s decisions.
Call us at (212)-320-8191. You may also email us at Info@urgenttaxservices.com