Protecting your assets and arriving at a reasonable resolution in the course of an IRS tax audit can be achieved using a couple of methods. Although these strategies are complex and require adequate representation, you can trust our tax experts from Anthem Tax Services to work out and pursue a reliable tax audit defense strategy for you. We help you reduce any financial damage from your audit to the least possible. You can count on us to be with you at every step of the way while ultimately ensure that you get the best possible resolution.
What is an IRS Tax Audit?
IRS Tax audit is the last thing every taxpayer wants to face. Hence, whenever it comes up, the individual or business gets overly worried. The truth is, being singled out for an IRS tax audit is not an indication of any wrongdoing or debt. Instead, the individual or business in question is expected to prepare a strong tax audit defense, preferably, by working with a tax professional. This is why you should entrust such responsibility to our Anthem Tax Services tax experts. We will not only guide you through your audit experience but ensure that you get the best audit defense that culminates into the desired resolution.
After filing a tax return with the IRS, the auditors will audit your return to assess additional tax within a space of three years to audit your return to assess additional tax. Once you get the receipt of the notice, proceed to prepare all the records and previous tax returns. Having these ready will help you get the right idea of your tax history. The IRS may then conduct an examination, either in person or via email, through an interview, followed by a complete review of your records. The usual venue of such interviews is either the IRS office or the individual’s home or the business’s office.
The IRS may not disclose the reason for the audit. However, among other things, you will be informed of the documents to bring along via the audit notification letter. You and/or your tax return preparer will be required to provide detailed explanations about the numbers behind your tax return(s). All these and many more can be handled for you by our tax professionals at Anthem Tax Services, with the ultimate aim of helping you go through an IRS tax audit with the least possible financial damage.
What the IRS expect to find during a Tax Audit?
The IRS expects a business or individual to have their tax information accurately documented. While there are no specific criteria or conditions for choosing who to audit, the IRS tends to be interested in situations of apparent tax avoidance. Interestingly, only about one percent of all income tax returns is checked by IRS auditors. Your returns may be at higher risk for an audit, depending on the type of such returns and your income level. The IRS may decide to audit any return based on a wide range of reasons – from payroll to regular income tax situations. Irrespective of the type of return you filed, ensure that you have the required documentation and records to defend such returns if need be.
The IRS is empowered to examine any relevant records and books related to your tax return preparations. According to the Internal Revenue Code §6001, the IRS is empowered to demand documents and files that confirm whether a person or business is liable for tax or not. The best way to be fully prepared for such situations is to work with competent tax professionals to organize a suitable tax audit checklist. At Anthem Tax Services, our tax experts will help you to organize your relevant records and create an excellent tax audit checklist, in preparation for your IRS tax audit.
What does a tax audit checklist contain?
- A well-organized tax audit checklist comprises the following;
- Tax returns under audit
- Relevant financial statements
- Check register
- Other documents that will help in creating a complete yearly financial record
It is essential to understand your tax return from that tax year clearly. This will help you present your facts better to the IRS auditor. Alternatively, if you are working with a tax preparer, set up a meeting with them to familiarize yourself with the records and identify the triggers for the audit (if any). Anthem Tax Services can work with your tax preparer to help you prepare excellently for your initial audit meeting.
Note that the auditors will also examine your lifestyle alongside your tax return. The auditor will most likely be interested in how you sustained the income contained in your tax return. For instance, the IRS will be more interested in examining your lifestyle if your business is being audited for self-employment income. If you are not sure of your ability to defend the facts from your return clearly with relevant records, work with your tax preparer and come up with an acceptable explanation.
Preparing your records for an IRS Audit
You should be ready to present all applicable financial records and books to the IRS auditor that shows up for your IRS tax audit. Interestingly, the tax code doesn’t mandate businesses to keep a formal set of books; a cash register tape and a checkbook will suffice. However, if there are additional record-keeping documents that exist – journals and ledgers – they are expected to present them. It is not advisable to hide financial records from an auditor. If the records are inadequate, the auditor will be forced to project an income and/or expenses for you, and subsequently fine you for keeping inadequate records.
What happens when a business or individual fails to substantiate items the IRS Auditor has uncovered?
You shouldn’t just present any and every documentation or records to the IRS. To know what to present or not, work with a tax professional to handle your tax audit defense. Putting out the wrong information can uncover even more information that could implicate you. While it is mandatory to present all the required documentation, do not offer too much information to the auditors. Hence, you must be cautious and careful while sorting the documents to submit.
Excellent sorting of records is pivotal to a successful tax audit. This will give you a foresight of what to expect and the best explanation to give in respect of your financial history. You must be able to defend the return items under audit while providing clear and plausible explanations. It is advisable that you stay proactive and 100% cooperative with the IRS in the course of the audit. Misunderstandings can be costly.
How do you solve tax problems?
In most cases, IRS auditors favor dealing with tax professionals over individuals or business owners because the former understands their methods better. With tax professionals in the picture, the tax audit will be more straightforward, and the “hand-holding” involved in the process will be released to the minimum. On the part of the business or individual being audited, hiring a professional tax expert increases their chances of being treated fairly by the IRS. Note that unfavorable tax audit outcomes can be appealed, either by appealing directly administratively with the IRS Appeals Division or by seeking a conference with the examiner’s manager. Such an appeal must be filed within 30 days of receipt of the outcome. Once you have filled an appeal, keep all your financial records organized and file a Freedom of Information Act request for the records of the auditor. With this, you can see the information the auditor has gathered in the course of the audit.
There are pros and cons associated with appealing an IRS audit. But more importantly, it is free, and it helps to get some tax savings. Also, it gives you ample time to decide on the best payment method for the money owed. Likewise, appealing may uncover the issues the initial audit might have missed, thus making your liability even worse. Finally, your interest will not stop accruing on your tax bill even when the appeal is on.
Consult us at Anthem Tax Services for professional guidance on the possible risks and benefits that come with the appeal process. This will prevent you from facing even more problems. You can also trust Anthem Tax Services to handle all your tax audit and return related issues. We have been in the business for over a decade and boast a sterling reputation as a reliable debt and tax relief company. We will be delighted to manage your tax audit defense.
Reach us today on 877-999-0486 to get a free tax consultation.