So the thing you’ve dreaded has happened: The IRS has targeted you for an audit. IRS audits can be terrifying, but with a skilled tax consultant on your side, they don’t have to be. Here’s how a tax audit defense consultant can help.
Understand Why the IRS Is Auditing You
If the IRS has flagged your income tax return for an audit, your tax consultant will need to know why they’ve chosen you before building an audit defense strategy. Some common reasons for IRS audits include:
- Underreporting or not reporting income
- Suddenly switching from married filing jointly to filing separately, or vice-versa
- Consistently claiming losses or deductions you’re not allowed to take
- Claiming extremely high vehicle mileage
- Exercising complex stock options
- Making errors on or not properly filing your Schedule E for royalties or rental income
- Reporting 1099 income that doesn’t match the 1099 sent to the IRS
- Not responding to letters the IRS sends you
Sometimes, the IRS audits you even if you’ve done none of these things. The IRS randomly audits about 15,000 to 20,000 people a year, which means you could end up involved in an audit simply due to bad luck.
Know Your Rights
An IRS audit can feel threatening, but remember that you still have rights. The IRS can only conduct one inspection of your books without notice. Other rights include:
- The right to seek representation from a certified public accountant, tax audit defense attorney, or enrolled agent
- The right to postpone the audit interview until you talk to a tax consultant
- The right to know why the IRS is asking for certain information
Audit Defense Strategies
When the IRS has targeted you for an audit, you might feel like there’s no way to fight it. But a good tax consultant can employ a few strategies to minimize penalties, and they might even be able to help you avoid fees entirely.
One strategy is to prove that you accurately reported all of your income. Even if the IRS thinks you’ve underreported, if you have the documentation to back up your claims, you’ll probably be in the clear.
A tax consultant can also try to limit the scope of the audit. Some auditors request a generic list of information from you, and if you comply, it could open you up to more scrutiny. A tax consultant can ask that the auditor limits the scope to only the tax years and information relevant to your case.
One other strategy to try is appealing the auditor’s decision. If you’re unhappy with the outcome of an audit, you can request a new auditor to look over your case. Should this fail, you may need to go to tax court. A tax consultant can represent you if this happens.
What Happens After an Audit
If taxing authorities say you owe money after the auditing process, you don’t have to pay it back all at once. A tax consultant can help you set up an installment plan to pay a little at a time over up to 84 months.
If you’re unable to pay anything right now, your consultant can work with the IRS to set up an offer in compromise (OIC). With this agreement, the IRS gives you six to 24 months to pay what you owe.
Contact Levy & Associates Tax Consultants for Audit Defense
When you’re facing an IRS audit, you don’t need to go through this stressful process alone. A skilled tax audit defense consultant from our firm will handle all communications with the IRS and represent you if your case goes to court.
To reach Levy & Associates Tax Consultants at our Delray Beach, FL, location, call (561) 933-6705. For our Lathrup Village, MI, office, call (313) 367-0985.