IRS Audit Procedure

A tax audit conducted by the IRS looks at an individual’s income sources or business accounts to ensure that the information reported on the tax return is correct. The IRS audit procedure aims to check that the amount of tax was computed accurately. The IRS implements the tax laws and scrutinizes information to ensure that they comply with those laws and regulations. Many people are not sufficiently prepared for an IRS tax audit and should become more informed so they know how to deal with the situation and present their information in a way that can quickly show the IRS tax auditors that their tax position is in order.

The IRS has certain specific methods of selecting taxpayers for audit. The fact that particular taxpayers are examined closely in a particular tax year does not mean that they are suspected of any wrongdoing. Many people are selected each year on a random basis for audit. The IRS uses statistical means of selecting and examining a sample of taxpayers each year. People may also be selected for audit if the information included on their tax returns does not tie in with the evidence gained by the IRS from third parties. An audit of a particular individual or business may be conducted because another person or business that has transactions with that person is also under examination by the IRS.

Carrying Out The IRS Audit Procedure

A tax audit could take the form of correspondence from the IRS or the individual may be called in for an interview. This could take place at an office of the IRS or at the home or business premises of the taxpayer. If the taxpayer uses an accountant or advisor the interview could take place at the business premises of that advisor. The IRS will communicate what records need to be examined and ask the taxpayer to provide the necessary information. After a full examination of the books, records and supporting documentation the IRS will tell the taxpayer if an adjustment is to be made to the tax liability shown on the tax return.

Rights Of The Taxpayer

Sometimes people who are the subject of the IRS audit procedure may be inclined to feel worried and under pressure, but it is best to take a calm view of the situation and be sure about the rights of the taxpayer and the duties of the IRS. The taxpayer has a right to confidentiality on tax matters, professional treatment by the IRS, and importantly has the right to know why particular information is being requested, what use will be made of it and the consequences of failing to supply the information to the IRS. The taxpayer has the right to be represented by an accountant or advisor and should consider this carefully if notified that an IRS audit procedure is to begin.

At the end of the tax audit the IRS may decide that no change is required to the tax liability already reported by the taxpayer. Alternatively, the IRS may explain that certain income was missed from the tax return and obtain the taxpayer’s agreement to a revised tax liability. If the taxpayer disagrees with the conclusions, decisions made by the IRS can be appealed administratively or through the Courts. For further guidance on the IRS audit procedure taxpayers may consult the information available on tax audits from the IRS website including a video on the subject.

IRS Audit

The IRS is reporting another shortfall in taxes collected.  The reason for this tax shortfall is that most corporations under report their income as well as small business and individuals.  The average person doesn’t underreport because their taxes are automatically taken out of their pay checks.  According to the IRS, there is only about 1% misreporting when some one is reporting your taxes and income.  Its the other group of people that the IRS has to police against.  With 140 million taxes returns filed each year and with only 22 thousand employees, the IRS can only do so much.  So the agency tries to go after categories or class of tax payers that are more likely to misreport.  For example, they audited more than 62,000 corporate returns and roughly 1.6 million individual returns, including one in eight millionaires.  As every penny counts these days when the government is facing a $1 trillion annual deficits.

Best wishes!

From everyone at Find IRS Tax Lawyer, we like to wish every one a healthy and prosperous new year.  Tax season is upon us.  Start getting your paper work together.  It pays to be prepared and to your taxes early if you are going to get a refund.

Offer in compromise

When dealing with the IRS on a tax debtor, you can make an offer in compromise to settle your IRS debt.  An offer in compromise allows you to settle your tax debt for less than the full amount owed.  The option is available if you can’t pay the full amount owed or doing so will cause extreme hardship.  The factors that IRS will consider will be your ability to pay, your income, your expenses, and your asset equity.

To be eligible to make an offer in compromise you have to be current with all filing and payment requirements with the IRS.  Whether or not the IRS will accept your offer will be based on whether it represents a realistic amount of money that they can hope to collect within a reasonable period of time.  Talking to a tax lawyer who can prepare your settlement offer will make things a lot easier on yourself.

Internal Revenue Code 61(a)

People always ask if they received a settlement payment from a lawsuit if that payment is taxable?  Internal revenue code section 61(a) states that, all income from whatever source is taxable unless excluded by a specific provision of the tax code. Section 104(a)(2) states that income received for personal physical injuries or physical sickness is not included as your gross income.  So what does this all mean?  It means that if you settle a lawsuit and get a payment from the settlement it is generally taxable unless the payment was for physical injuries or sickness.

Find IRS Tax Lawyer

Welcome to our new tax lawyer website.  If you owe money to the IRS and need to work out a reduction of your debt with IRS, you are going to need to work with a IRS Tax lawyer because these professional specialize in helping individuals, families and business with large judgments.  They work with the IRS everyday and can lend their experience to negotiate a good settlement for you.  They can help stop wage garnishments and bank levies against you while you work towards a reduction of your debt and a payment plan for you to re pay your owed taxes.