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Are You Being Audited By The IRS?

Now, there are three types of “audit”. Also, IRS prefers to call audits “Examinations”:

[1] IRS issues a Notice asking for clarification of a single tax return item that appears to be incorrect. This is a Correspondence Examination. During FY 2014, 71% of all examinations were conducted by correspondence.

Comment: While you may think that simply providing the requested information to IRS will quickly solve the matter, this is simply not true. You may be adding fuel to the fire. Any communication with IRS is dangerous, as it may steer IRS in a direction unfavorable to you. You really need to call us.

[2] IRS requires a face-to-face interview and a review of your records. Face-to-face examinations are generally more comprehensive and time-consuming for the IRS and taxpayers, and typically result in higher dollar adjustments to the tax amounts. i.e. you lose.

Comment: This is the worst type of examination, bar none. You should treat this with the utmost seriousnesss. It's no different then being interrogated by a District Attorney. You need representation lest you utter something that will “incriminate” you. Call us immediately when you get a letter from IRS.

[3] In addition to correspondence and face-to-face examinations, the IRS also uses several computer-matching and automated error-checking programs to verify the accuracy of tax returns. These routines often identify adjustments to tax liabilities.

Comment: A typical example is an overlooked statement of interest income from a bank, or even a Form 1099-MISC for some work you performed. You should check your records, as well as perhaps communicate with the Third-Party who reported the income. 99% of the time, you will have to pay tax on the unreported income. If you believe the amount was incorrectly reported, you will need to argue this with IRS. Call us.

Don't forget that your State will also have to be paid additional tax. So, although IRS has conveniently calculated your additional IRS tax, you will have to prepare an amended State tax return. Call us.