IRS Audits Can be Successfully
Fought!
IRS Audits
and State Tax Audits strike fear into any potential tax audit
victim. Business owners, professionals, corporations,
partnerships and LLCs have more complicated business
transactions than most W-2 wage earners.Tax increases, tax
penalties, interest and even claims of civil tax fraud are the
potential result of a mishandled tax audit. Without the
assistance of a qualified tax lawyer before the audit even
starts, a taxpayer is starting behind the IRS professionals. The
first step is preparation and acquisition of tax law
information.
IRS auditors, known as Internal
Revenue Agents, and their criminal counter part, CID (Criminal
Investigation Division) agents have extensive training and
education. Without the assistance of a qualified tax lawyer
before the audit even starts, a taxpayer is starting behind the
IRS professionals. The first step is preparation and acquisition
of tax law information.
General Information Concerning
Audits
You are not going to
jail!!!!!
Almost all tax audits are simply about
the various levels of government trying to get
more money. Every year, usually around the April
15 filing date, the IRS announces a vicious prosecution against
nationally (or locally) known high profile individuals. This is
part of the IRS enforcement technique to scare taxpayers into
"following the rules" imposed by the Treasury. But the fact does
not change that few taxpayers are indicted solely for tax
matters. An IRS Audit notice is for money not jail!
Do Not Wait to See How the
Audit "turns-out" to consult a tax lawyer!
Winning the audit requires the
taxpayer to prepare for the audit. Good preparation is
more than simply gathering the documents demanded.
Identification of the tax law issues and factual areas of
contention require the experience and knowledge of a tax
attorney. Even if the return was prepared by a CPA or
professional accountant, the approach of the tax attorney is to
advocate for the taxpayer. Immediately, arrange for an initial
consultation to prepare for the audit.
Types of Audits
There are three general types of IRS
Audits:
1. Mail Audit
2. Office
Audit
3. Field Audit
The Mail Audit is typically if there is a
discrepancy within the return (such as a calculation error) or
with third party information such as 1099's. Usually, these
audits merely require submitting backup information, documents,
and an explanation. Typically, this type of audit requires
minimal assistance.
An Office Audit normally is for W-2 wage
earners and some small business owners. The taxpayer is required
to bring substantiating documentation for the return to the
local IRS Office for analysis. The Office Audit typically lasts
1 day or less. Frequently, taxpayers are lulled into believing
that the audit is "simple" and "straightforward" and try to not
have legal representation. This is how an unwary taxpayer can
fall into the traps of the IRS Revenue Agent. Immediately upon
receipt of an Office Audit Notice, the taxpayer should consult a
tax lawyer.
Field Audits, where one or more IRS
Revenue Agents come to a taxpayer's office are usually received
for corporations, partnerships and limited liability companies
(LLC), although complex sole proprietorship are also subject to
field audits. The audit has to go to the office of the taxpayer
because the documentation and legal issues are voluminous and
complex. The taxpayer should expect to obtain legal
representation as well as further accounting assistance to
prepare for the audit.
Tax Professionals
Tax Attorneys are the
most educated professionals in the tax field. As a
lawyer, a tax attorney earns a Bachelor's degree, then a
Juris Doctor or Doctor of Law (J.D.) from a Law School.
After taking the rigorous Bar Examination, and
being admitted by the State Supreme Court to the
Practice of Law, typically, the tax lawyer pursues
further academic study and writes a thesis to earn a Master
of Laws in Taxation, known as the LL.M.(Tax). Lawyers are
comfortable advocating for their clients. Lawyers are
not afraid of taking adversarial positions and filing the
necessary appeals (including representation in the US Tax Court
and US Court of Claims.) IRS Revenue Agents know the training
and knowledge of the tax attorney.
Certified Public Accountants, CPAs,
have earned a Bachelor's degree and have taken an exam
to become Certified. Most CPAs are not specialists in the field
of tax law or tax accounting even though they may prepare tax
returns. CPAs typically assist taxpayers and businesses with
bookkeeping, accounting issues, and "number crunching."
:
Public Accountants, PAs,
frequently have a Bachelor's degree or some other
training in accounting. They have not otherwise qualified to
become a CPA. Many public accountants came to the accounting
field based upon special training in a company or
industry.
Enrolled Agents, EAs, are
usually retired IRS employees permitted by the IRS
represent taxpayers.
Tax Return Preparers are frequently
part-time seasonal workers preparing individual tax
returns.
