Are One of the areas of practice that I’m most proud of in our firm we’ve dealt with some very difficult cases.
The IRS audits people for many different reasons but generally speaking when the IRS audits an individual or business it’s expecting to yield additional tax due to owing on a return.
So IRS revenue officers are field collection agents and they spend about fifty percent of the time in the field going after taxpayers and/or chasing their assets. So if a revenue officer shows up your home or place of business, understand you’re not obligated to talk to the revenue officer.
The first steps you should take in the audit are to gather your documents and to understand your risk. The first thing that we look at when we have a prospective client come into the firm is why we think the returner got audited. Every return tells a story and it’s only a matter of time before we go through the return and learn what that story is. In speaking with taxpayers what we often find is that people either lack
The taxpayer will then gather that information and will meet with the auditor.
The IRS is comparing the return that was filed versus the substantiation that you’re providing and matching.
The problem is is that most taxpayers get audited have some sort of adjustment.
Often the documentation that the IRS is looking for in your audit will fall into two categories: income side documentation and expense. A review of the IDR that the auditor provided will give you an idea what the focus of the audit is going to be on the income side. The IRS is going to ask you for bank statements and for supporting accounting if applicable that would tend to corroborate the amount of income that you claimed on your return. You can expect to produce a profit and loss if you’re a business, you can expect to produce a general ledger and the IRS will also want to see any credit card or any other financial account statements that would tend to corroborate your income. On the expense side they’re going to be looking for proof of deductions. So what that means is they’re usually looking for receipts, invoices and other documentation that would tend to corroborate your expenses although you can be dinged for missing invoices.
For the auditor to perform his task he will require all the documents which he will request. Read the blog to now why and how it will help.
The first thing you need to do if there’s a serious error on your return is to understand.