Every year, Americans are required by law to file federal and state tax returns. The Internal Revenue Service is the government agency responsible for gathering returns, analyzing them for accuracy, and collecting back taxes or dishing out tax returns.
The IRS reviews tax returns for inaccuracies. For example, it is common for a taxpayer to miscalculate the amount they owe or claim the wrong deductions. Sometimes, there are more significant discrepancies that might lead to an audit.
The IRS conducts tax audits every year to examine returns that have been flagged for potential problems. Think of an audit as a more in-depth inspection of your personal or professional accounts by the government agency.
The IRS utilizes different procedures for an audit, based on several factors. Regardless, it is especially important to have a strong audit defense to protect you or your business interests. Dealing with the IRS by yourself is time consuming, stressful, and worrisome. The experienced audit defense team at Levy & Associates can alleviate some of that stress by working to ensure you receive a favorable outcome from the IRS.
IRS Tax Audits
The Internal Revenue Service (IRS) uses an audit to examine the financial records of your personal taxes or business taxes. Audits help determine whether your records are accurate. The IRS has a process for conducting an audit through a systematic review of past transactions. Therefore, the agency may investigate your financial statements and accounting books during an audit.
It is not uncommon for some businesses (particularly larger earning companies) to have a routine audit once per year. On the other hand, it is unusual for personal tax returns to go through an audit. In fact, the IRS audits less than one percent of all returns each year, and the vast majority of audits are conducted via mail correspondence.
While you would suspect that most people who are flagged for an audit are higher-income earners, the IRS also tends to target people that make less than $25,000 per year. Therefore, tax audits don’t necessarily discriminate based on income. Everyone that files a tax return has the possibility of getting audited, which is why you need to cover your bases.
What Is Audit Defense?
Personal income filers and small business owners are responsible for filing their taxes every year. You not only need to file taxes, but you also need to do so correctly. Small businesses have more income and expenses they must track, as well as deductions to claim.
Consequently, the IRS sometimes targets small businesses more than personal income returns to make sure their accounting books are accurate. By a careful review of your records, an IRS agent can determine if your records are clean or missing anything.
Most small business owners hire help if they receive an audit notice, but even individuals being audited can benefit from connecting with an experienced tax professional. While a tax audit does not mean that you did anything wrong (it merely means the IRS needs more information to verify the accuracy of your return), it is still a stressful and hectic process.
Audit defense is the best way to confront and overcome a tax audit. It is professional help from an individual or firm that has experience dealing with the IRS. The tax professionals that provide audit defense at Levy & Associates are well aware of the audit process and are perfectly positioned to create a plan and represent you or your company every step of the way.
A strong audit defense eliminates a lot of time and effort you would otherwise need to dedicate to the IRS. Additionally, because some agents are known to be pushy, it also avoids the hassle and stress defending yourself on your own.
The IRS is more likely not to act aggressively and try to bully someone with representation. Since most taxpayers that represent themselves lack knowledge and experience dealing with the IRS, they are more likely to be taken advantage of, which makes hiring a defense all the more important.
Do I Need Audit Defense?
Several services currently offer a type of audit defense. Tax preparation services generally back their assistance with an audit defense guarantee. You can find a similar guarantee with most DIY tax-software providers (i.e., TurboTax), but sometimes you need to pay extra for the coverage, and you should always be wary of these cookie cutter-style services.
On the other hand, tax professionals offer a more personalized experience, and you’ll get to know your audit defense. These professionals may already handle accounting for your business throughout the year or be strictly hired for audit defense.
While many different services advertise some form of “audit defense,” the level of treatment varies. You need to be careful with the service you select, because they are not all equal. Some will only do the basic lifting to protect you or your company. In contrast, the audit defense team at Levy & Associates will shoulder the full burden of your audit so you can get back to focusing on your business.
You should never settle for an audit defense that does not provide at least the following:
- Respond to audit notices on your behalf to the IRS.
- Defends your federal and/or state tax return in audit hearings or appointments with auditors.
- Provides access and support from audit representatives like enrolled agents or CPAs.
- Helps resolve tax debt or identify theft related to the audit.
Prepaid Audit Defense vs. Audit Representation
There are two distinct separations between types of audit defense: prepaid audit defense and audit representation. Prepaid audit defense is something like you would get from TurboTax, where the tax prep service agrees to help you with certain aspects of the audit for a given amount of time (usually three years).
Meanwhile, audit representation is a much more thorough type of service. Audit representation goes to bat for you during appointments and when gathering records for review. Prepaid audit defense is not available after you get audited. You need to purchase the protection (similar to some forms of insurance) beforehand to be entitled to the service. On the other hand, you can hire audit representation at any point in time, even after you get an audit notice.
For this reason, prepaid audit defense services are traditionally inferior to audit representation. The protection not only needs to be paid for in advance but is also usually basic. Getting defense services through a massive prep service or software provider means your treatment will be minimal and lack personal service.
On the other hand, audit representation makes a point to get to know you and your business. Our tax professionals will tackle the bulk of the work of your audit, easing your burden and allowing you to focus on the day-to-day operations of your company or work.
Since audits are time-consuming and demanding, the best way to remedy a sticky situation with the federal government is to consult a tax professional. Instead of facing the situation alone or dealing with a faceless prepaid service, contact Levy & Associates as soon as possible.
Is Audit Defense Worth the Money?
Taxpayers and small business owners tend to panic whenever they hear the nasty five-letter word “audit.” However, there’s no need to panic, as audits are part of the normal tax process and do not always mean that you did anything wrong.
Most audits are conducted through mail correspondence and usually only require minor adjustments or clarifications. On the other hand, business audits are far more complicated, time-consuming, and stressful.
Possibly the biggest challenge with audits is that they consume a lot of your time. Even if it turns out you did not file incorrectly, you will spend more time with an auditor than you’d prefer. For example, you will receive notices, need to contact the IRS, gather records, meet for appointments, and deal with the aftermath of a decision.
Hiring the right audit defense can take all that workload off your plate so you can get back to running your business. The best aspect of an audit defense is that you’ll be working with a professional who is used to dealing with the IRS. Tax professionals know how to create a personalized defense while dealing with the paperwork and collection of records. Furthermore, they’ll represent you at hearings and protect you from getting bullied by an IRS agent.
You are far more likely to receive a favorable outcome from an audit with the right defense. Anyone that goes at it alone will spend far more time dealing with the IRS directly, especially if they lack experience with the government agency. Audits can take weeks, months, or even years, depending on the complexity of the issue. You may need to dig deep into your books or find availability for meetings.
While the chances of getting audited are slim, you should not play around with the outcome if you or your business is selected for one. The decision of an audit could impact the future of your income or the business. It is not something worth risking, especially when you can hire a knowledgeable and experienced professional to help you.
As a result, most small business owners are more than willing to hire a professional tax service to handle an audit. Think of it as hiring a lawyer to represent you in a lawsuit that was brought against your business. It is simply better to defend yourself with an experienced team compared to going it alone.
Though a high-quality audit defense does cost money, it is a far better option compared to a prepaid defense offered through a company like TurboTax. At Levy & Associates, you’re a valued client—not a number. You can rest assured that we’ll put our extensive experience to work defending you throughout the audit process.
Contact Levy & Associates for Audit Defense
Have you received a correspondence letter indicating your corporate or personal tax returns have been selected for an audit? If so, let Levy & Associates’ audit defense team help!
Audits are stressful and time-consuming, and you shouldn’t try to represent yourself in one. Our audit defense team consists of experienced CPAs, attorneys, enrolled agents, and former IRS revenue officers. All told, we have over 100 years of collective experience and personnel that have handled various types of audits.
We pride ourselves on offering excellent customer service and back that with an A+ BBB Rated staff that is available 24 hours a day, 7 days a week! If you have been selected for an audit and need audit defense, reach out to Levy & Associates today.