In this age of deficits and tight budgets, it should be no surprise that the IRS has placed increased emphasis on collecting the correct amount of taxes and the audit is a powerful tool the IRS has at its disposal for these purposes.
During an audit, the IRS will scrutinize your tax returns for all years in question and will generally demand supporting documentation for all income sources and any expenses and deductions you may have claimed. If the IRS assesses additional taxes and interest, the increased taxes generally trigger a review by the State and a similar increase in your State taxes, compounding an already dire situation. If an audit results in increased taxes, there will likely be accompanying penalties for incorrect reporting of items on your tax return as well as accrued interest and late penalties. States and local taxing authorities will also asses penalties and charge interest.
Engage Legal Representation as Early as Possible in the Process
It is imperative that you seek competent legal representation from a tax attorney in case of an audit. Engaging the services of an experienced legal team to help with an audit defense can significantly increase your chances of getting a favorable outcome. An attorney will analyze your situation, assist you in gathering the documentation and marshaling the facts necessary for the defense, and will brief legal matters to the IRS and will interface with and negotiate with the IRS on your behalf. IRS agents prefer working with professional tax representatives because it makes their job easier and helps the process move along more efficiently.
Upon hiring our firm we will file with the IRS a Power of Attorney Form signed by you which authorizes our representation. This will allow the IRS to direct all communications to our office and allow us to:
- communicate with the IRS on your behalf regarding your rights, privileges, or liabilities under laws and regulations administered by the IRS;
- representing you at conferences, hearings, or meetings with the IRS;
- prepare and file documents, including tax returns, with the IRS on your behalf;
- negotiate and settle taxes owed if you end up owing more money during the audit and cannot pay; and
- handle any unforeseen issues that may arise during the audit.
Most importantly, the assistance of competent legal representation will relieve you of the stress and worry of the audit and give you a powerful ally who will fight for your rights.
Call us now at 513-229-2900 to discuss your audit issue.
Conduct of the Audit
Most audits are done through a combination of written correspondence, IRS requests for documentation, and face-to-face meetings. Facing the IRS in the event of an audit is a very intimidating and nightmarish process for most people. Not to mention that most people do not know what to say and, more importantly, what not to say. You should not attempt to represent yourself. If you hire our firm, we will take on the responsibility of your representation and we will respond to and interface with the IRS so that you do not have to.
Protect yourself from costly and potentially irrevocable tax penalties that may result from IRS audits. Our law firm understands audits, appeals and tax laws. We bring together a team of legal professionals and outside accountants to provide the best most cost effective representation for clients. Our firm and the teams we assemble have years of experience representing individuals and businesses dealing with audits and other tax problems.
IRS agents who conduct audits are trained to act in the best interest of the IRS and United States government. You can rely on our firm to work equally hard to ensure you are treated fairly and respectfully. Protect yourself against further tax penalties by relying on our services to provide reliable audit defense.
Contact the Allen Law Firm today if you are facing a potential audit from the IRS or other tax dilemma.
Appealing an IRS Audit
If you have already been subject to an audit and have received an adverse decision, you will want to file an Audit Appeal. As a first step, appeals of adverse audit decisions can be taken to the IRS Office of Appeals. The appeal must be taken within 30 days of the issuance of the audit decision and the “30-day Letter” from the IRS agent in charge of the audit.
The Office Of Appeals is independent of any other IRS office and provides a forum where disagreements concerning the application of tax law can be resolved. The Appeals Officer will take a fresh look at the case and consider the strengths and weaknesses of your case. The advantage of this process is that it provides us with the opportunity to reach a mutually acceptable settlement without expensive and time-consuming court trials.
If the administrative appeal time has run, or there is an adverse decision at that level, you will receive a “90-day Letter” that starts the time in which to appeal the case to the U.S. Court of Claims, U.S. District Court, or Tax Court, as appropriate. Generally, only cases in which the assessed tax has actually been paid and a refund denied by the IRS will be considered by the U.S. Court of Claims or U.S. District Court on appeal.
You should hire a competent, knowledgeable tax attorney to represent you in all phases of the appeals process. When we are hired to represent you, we will put together a team, gather and prepare documentation, brief the legal and factual issues and communicate directly with the Appeals Officer. Because we know how to present your case with appropriate legal arguments and tax authority, we will build a persuasive case for you and present it to the IRS. Of course, if we cannot reach agreement with the Appeals Officer, then we have the opportunity to appeal the case further or take other appropriate action.
Call us today at 513-229-2900 to learn more about Appealing an IRS Audit.
Reconsideration of an IRS Audit
If the time for an administrative appeal or appeal to the U.S. Courts has run, you can still request a reconsideration of the audit from the IRS. The audit reconsideration process is discretionary, which means that the IRS does not have to reconsider the audit, but, if the IRS is provided with sufficient reasons to do so, it most likely will reconsider the audit.
Generally, the IRS will reconsider an audit where you submit new information that was not previously considered; where you file new tax returns; where you can demonstrate a computational or processing error by the IRS; and where the liability is unpaid or credits are denied. Likewise, generally the IRS will not reconsider an audit where you have signed an agreement agreeing to the tax assessment, such as a Closing Agreement (Form 906), a Compromise Agreement, or an Appeal Agreement (Form 870-AD); where the tax you allegedly owe is a result of final partnership item adjustments under the Tax Equity Fiscal Responsibility Act of 1982 (TEFRA); or where a U.S. Court has made a final determination of your tax liability.
As in the case of an audit appeal, you should hire a competent, knowledgeable tax attorney to represent you in all phases of the reconsideration process. When we are hired to represent you, we will put together a team, gather and prepare documentation, brief the legal and factual issues and communicate directly with the IRS agent assigned to your case. Because we know how to present your case with appropriate legal arguments and tax authority, we will build a persuasive case for you and present it to the IRS. Of course, if we cannot reach agreement with the IRS agent assigned to your case, then we may have to take further appropriate action.
Call us today at 513-229-2900.
How Returns Are Selected for Examination
According to the IRS, it selects returns for Examination or Audit according to a number of different criteria:
Potential participants in abusive tax avoidance transactions — Some returns are selected based on information obtained by the IRS through efforts to identify promoters and participants of abusive tax avoidance transactions. Examples include information received from “John Doe” summonses issued to credit card companies and businesses and participant lists from promoters ordered by the courts to be turned over to the IRS.
Computer Scoring — Some returns are selected for examination on the basis of computer scoring. Computer programs give each return numeric “scores”. The Discriminant Function System (DIF) score rates the potential for change, based on past IRS experience with similar returns. The Unreported Income DIF (UIDIF) score rates the return for the potential of unreported income. IRS personnel screen the highest-scoring returns, selecting some for audit and identifying the items on these returns that are most likely to need review.
Large Corporations — The IRS examines many large corporate returns annually.
Information Matching — Some returns are examined because payer reports, such as Forms W-2 from employers or Form 1099 interest statements from banks, do not match the income reported on the tax return.
Related Examinations — Returns may be selected for audit when they involve issues or transactions with other taxpayers, such as business partners or investors, whose returns were selected for examination.
Other — Area offices may identify returns for examination in connection with local compliance projects. These projects require higher level management approval and deal with areas such as local compliance initiatives, return preparers or specific market segments.
Regardless of how your case is selected for an audit, we cannot stress enough the necessity for you to engage competent, knowledgeable legal counsel in dealing with these situations.
Call us today at 513-229-2900 to learn more about Audit Defense.
Serving Southwest Ohio clients in Cincinnati, Mason, Lebanon, West Chester, Montgomery, Hamilton, Middletown, Batavia, Wilmington and surrounding areas.
Warren County • Butler County • Hamilton County • Clermont County • Clinton County
