Tax Education

What Is a Civil Tax Audit?

The United States requires all citizens to pay taxes under federal and state laws. The Internal Revenue Service (IRS) reviews these taxes and, in some instances, will decide that a Civil Tax Audit is necessary. Tax audits are rarely a walk in the park, and they can often end with a taxpayer needing to pay additional taxes, fees for underpayment, and in some cases, receiving criminal charges. 

Hiring an IRS tax audit attorney can protect you from unjust charges and fines from IRS agents bent on finding reasons to charge you. When you are under an IRS audit, you have the right to seek representation to help you through this complicated process. The IRS could be interested in your finances for many reasons, including: 

·       Your returns stood out

·       You reported notable changes in your income

·       You had business associations with another individual under audit 

Sometimes your audit can come back completely fine, with the IRS agents concluding that you completed your tax returns correctly. In that case, you will see no changes, charges, or fines. However, the process is unpredictable, and a tax audit attorney gives you a better chance to receive that positive outcome. 

Our tax audit specialists at Levy and Associates have over 20 years of experience representing clients through the audit process. For tax audit representation, give us a call at 1-800-TAX-LEVY or fill out our contact form.

Civil Tax Audits Can Result In Financial Penalties and Criminal Charges

When the IRS audits you or your business, it is often looking for any instances where you failed to pay the proper amount on your tax returns. The looming threat of tax penalties is central to encouraging individuals to provide accurate tax information each year. 

Typically, after an IRS tax audit, most people must pay a 20% accuracy-related penalty. An accuracy-related penalty of this amount requires you to pay a 20% fee on the amount you owe in unpaid taxes, as well as the outstanding amount and related interest. 

Accuracy-related penalties are the most common type of penalty, and you could face one if you disregard IRS protocols, understate your income and amount due, understate the value of your assets, or pay your taxes late. 

In more severe cases, you could face civil fraud penalties. If you purposefully provide inaccurate information on your taxes, it is fraud. You may be guilty of civil tax fraud if the IRS finds substantial proof that you were aware of owing a higher amount in taxes but you deliberately underpaid through nefarious means. 

Most audits end with these kinds of fees and penalties that you can pay to clear your name. However, in some cases, the IRS could charge you with a crime. Criminal charges associated with your civil tax audit could include:

·       Lying on your returns

·       Evading your taxes

·       Not filing a return at all

·       Purposefully not paying your taxes 

If the IRS finds that you’ve committed any of these offenses, it will then present its findings to the Tax Division of the U.S. Department of Justice.

Mistakes and Reasonable Cause

Sometimes, you can explain underpayment on your taxes with the assistance of a tax specialist. We can help you if you discover a mistake in your calculations or if you have a reasonable excuse for the insufficient amount. Taxes are complex and easy to misunderstand for those who aren’t well versed in accounting. This complexity is why so many people pay accountants or other services to help complete and file their taxes. 

The IRS must be able to prove that you purposefully lied to charge you with a penalty or a crime. If you simply mixed up some numbers or misunderstood a portion of your taxes, you are not guilty of a crime (but you will likely still be required to make up the difference). 

The IRS will also consider various elements of your circumstances to determine if you attempted to pay your taxes correctly and could not do so for reasons unrelated to fraud. In this case, the IRS will examine your education level, calculation errors, advice you received from tax professionals, and other third-party information. 

At the end of your audit, if you believe that the IRS findings are inaccurate, you can request an appeal. Depending on the amount the IRS determines that you owe, you can file this appeal through an IRS form or a letter of protest.

Your Right to an IRS Tax Audit Attorney

If you come under IRS investigation for personal or business taxes, you have the right to hire a tax specialist or attorney to assist with your case. At Levy and Associates, we offer comprehensive tax services, including audit defense resources. Our talented team of tax specialists, CPAs, accountants, and attorneys has decades of experience to provide quality service. 

If you receive a notice of an audit in the mail, you may naturally have concerns about being the subject of an investigation. Even if you have nothing to hide, hiring a tax attorney to protect your rights and help you through the audit process can bring you valuable peace of mind. 

Our team at Levy and Associates can manage your audit and resolve it efficiently with the IRS. You shouldn’t feel as though you need to go through an IRS civil tax audit on your own. 

Hiring professionals can take the fear and frustration out of being audited. If you’re under audit from the IRS, don’t hesitate to give us a call at 1-800-TAX-LEVY. You can also reach us through our contact form

At Levy and Associates, we offer comprehensive services to meet your needs, no matter your tax situation. 

Contact Levy & Associates for Dependable Tax Audit Services

Levy & Associates is available for free initial consultations. We’re happy to answer any questions you have about the audit process or address any concerns about your specific situation.

There’s never a good time to be audited, and the time-consuming process will take away from your business or family if you try to face it alone. Let us handle and coordinate communication, so you can return to your daily life.