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As a tax preparer, Jeffrey D. Ressler, CPA & Associates can represent you in IRS federal and state tax audits no matter where you are located. We have handled audits via phone and fax from many states. Once we determine a plan of action, we have our clients sign a power of attorney that eliminates their need to speak with the IRS. This helps reduce stress as most people are afraid of either saying the wrong thing during an audit interview or just not understanding the issues.
Contents
1. IRS Representation
2. Have you received a notice for a tax audit?
3. Why does the IRS audit?
4. Tax audit time limit
5. What will happen during an audit?
6. How many years does the IRS have to audit my return?
7. Statute of limitations
Taxpayers have the right to choose an authorized representative to represent them in when they are dealing with the Internal Revenue Service. Those who retain representation are not required to appear with their representative until the IRS issues a formal summons.
If a taxpayer decides they want to speak with a professional like an attorney, certified public accountant, or enrolled agent, the IRS must halt the interview.
Receiving an IRS audit letter is terrifying for a business owner. An audit can cause an almost instantaneous fear that the business has done something wrong and that more money will be owed. While the worst fears are rarely realized, an audit may be a time-consuming and complicated procedure that most people lack the skills, resources, or time to handle correctly on their own.
Tax audits frequently entail many demands for records, information, and other resources in order to justify various items declared on the corporate income tax return. This procedure is typically exhausting and distracting, leaving executives unable to focus on their primary duty of operating the company.
It’s critical to realize that dealing with the IRS “on your own” is rarely the best choice. Working with an accounting partner who can manage the process, respond to paperwork requirements, thoroughly review IRS queries and create solutions, and resolve any difficulties as needed is usually more successful.
We have experience representing businesses in IRS audits, compliance, and office and field examinations. Our experts not only help you avoid the stress of an audit, but they also know how to respond to IRS requests in a way that puts you in the best possible position.
Audit rates have been going down since about 2010, with lower-income taxpayers seem to be getting audited the most. If the IRS audits your tax return, it will examine it closely to check if you reported all of your income and if the itemized deductions and credits you claimed are authorized by law. Tax audits aren’t usually conducted at random. Based on a sophisticated set of factors that includes income levels, the returns they select are the ones that are most likely to contain errors. Complex returns can also trigger an audit.
The Federal Government normally has three years from the time you file your return to begin and complete an audit. Typically, a tax audit begins a year after you file your return and is completed in less than a year. There are three ways an audit can be conducted. One is an audit by mail, called a correspondence audit. The other types are field audits, conducted in an accountant’s office, and office audits, done in the IRS offices.
During the audit process, the IRS will request information and records to justify your tax return’s position. Some deductions bring more scrutiny, like charitable deductions and a home office deduction. They will send a letter with a written request for the documentation they require, and it is critical that you give the information exactly as they request it. If we are handling the audit, provide us with the facts and we’ll work with the IRS on your behalf. All records used to prepare your tax return must be kept for at least three years after the tax return is submitted, according to the law.
In most cases, the IRS can audit returns submitted within the last three years. If the IRS audits your tax return, it will examine it closely to check if you reported all of your income and if the itemized deductions and credits you claimed are authorized by law. They may add further years if they discover a significant inaccuracy. They rarely look further than the previous six years. The great majority of audits will be for returns filed within the last two years, as the IRS strives to examine tax returns as soon as possible after they are received.
If the audit findings do not result in a resolution, the IRS may seek that the statute of limitations for assessing tax be extended. The period allowed to assess additional tax is limited by the statute of limitations. It usually takes three years from the time a return is due or submitted, whichever comes first. Refunds are also subject to a statute of limitations. Extending the time allows you more time to present further evidence to support your position, file an appeal if you disagree with the audit conclusions, or file a tax refund or claim an income tax credit. It also enables time for the IRS to finish the audit and process the results.
You are not obligated to agree to the extension of the statute of limitations. If you refuse the extension, the auditor will have to make a decision based on the information you offer, and a payment plan can be put in place.
If you have received a letter telling you you’re being audited, don’t hesitate. Call us today to see how we can help. 561-237-5264.
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