Archive for Audit

How Long Does The IRS Have To Audit A Tax Return?

A federal audit is, not surprisingly, an unwelcome event for most taxpayers. An audit is stressful and may result in a taxpayer owing additional money to the Internal Revenue Service (IRS). One question that many taxpayers have concerning federal audits is how long the IRS can take before auditing a tax return after that return has been filed. While the common perception that the statute of limitations on IRS tax audits is three years, the fact is that there are plenty of instances where the IRS can take much longer than that to audit one’s return. Below is a brief overview of the statute of limitations on tax audits in certain situations.
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The Service Issues New Administrative Authority Governing TPR Compliance

The Internal Revenue Service (hereinafter “IRS”; or “the Service”) recently issued on September 14th of 2016 an Audit Techniques Guide (hereinafter “ATG”) governing Tangible Property Regulation Compliance (hereinafter “TPR Compliance”).

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Written by | Posted in Accounting Methods • Audit • IRS

Penny Wise And Pound Foolish

Philip Wrigley had a problem. As the notoriously parsimonious owner of the Chicago Cubs in the 1970s, Mr. Wrigley did not want to spend big money to attract top players. But as the savvy owner of a successful confectionary business he also knew that no one would buy tickets to see a perennially second-division ball club. So he came up with the idea of the “loveable losers” a slightly-above average team that could win 80 or 85 games in a season.

The point of this story is that Mr. Wrigley did not want to be penny Read More

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5 Common Myths About The Dreaded Tax Audit

Filing taxes is punishment enough without the vague threat of an IRS audit looming over our heads. For understandable reasons, the IRS insists on keeping the ins and outs of its auditing process on the murky side. How will you catch the bad guys if you give them the rule book first? But because of the sense of mystery around the process, it’s an area of regulation often misunderstood by taxpayers.

Here are a few common myths about the dreaded tax audit:

Myth #1: Only the wealthy get audited.

While it’s true that big businesses and the uber-rich are often targets of IRS tax probes, that doesn’t necessarily mean low- and middle-income workers are free and clear. The Read More

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What If…

What if Adam and Eve had admitted that they ate from the Tree of Knowledge of Good and Evil, instead of pointing the finger at anyone else, and anything else, that happened to be there at the time? Would they still be lounging in the Garden of Eden today, munching on pomegranates instead of apples and perusing through YouTube videos on their iPads?

What if a small team of British commandos had been unable to disable Nazi Germany’s deuterium oxide factory in Vermork in 1943, after several prior attempts had failed? Would Hitler have gained the final component he needed for an atomic bomb, and attached these weapons to the V-2 rockets falling from the sky onto London?

What if that Star Destroyer captain had blown R2-D2’s escape pod to smithereens in the Read More

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What Is The Statute of Limitations On An IRS Audit?

The Statute of Limitations on an IRS Audit

Generally, the IRS can include returns filed within the last three years in an audit.  According to information contained on the IRS website, the IRS tries to audit tax returns as soon as possible after they are filed. This means that most IRS audits will be of returns filed within the last two years.

The IRS can choose to add additional years to an audit if a substantial error is identified.  In those cases, the IRS will not go back more than the last six years.

How Long Do I Have to Claim a Refund?

Just as the IRS must audit a tax return within a certain period of time, taxpayers also have Read More

Written by | Posted in Audit • Federal • IRS

Staff Reductions & Insufficient Funding Will Dramatically Impact IRS in 2015 And Beyond

Last Tuesday, IRS Commissioner John Koskinen addressed the New York State bar Association Tax Section in New York. His comments provide keen insight into the going-on’s at the IRS. Mr. Koskinen’s most important announcement centered on the agency’s anticipated reduction in the number of rulemaking projects as a result of budgetary constraints.

Although releasing guidance is one of the agency’s core functions, there are simply not enough attorneys in the Office of Chief Counsel to shoulder the burden. Nor are there any plans on the horizon to hire more workers, in light of the agency-wide hiring freeze.

“Our office of chief counsel continues to make every effort to issue guidance in a timely Read More

Written by | Posted in Audit • Corporate • Federal • IRS • Partnership

What To Do When You Get An IRS Audit Letter

A thick white envelope with a logo that looks like a yeti is scratching the top of a scale while a leaf floats through the scene arrives in your mailbox and frankly, you’re scared. That logo only means one thing: a letter from the IRS. And once you open the letter, you’re even more freaked out, because it’s an audit letter from the IRS that frankly, you don’t quite understand. Yikes So what do you do?

Here’s a quick checklist of how to survive your IRS audit letter:

First: Don’t Panic

Take a deep breath. Getting hysterical and angry is a rational response to upsetting news, but an audit doesn’t mean you’ve done anything wrong. It simply means the IRS wants to Read More

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FLASH ALERT! WOTC: IRS Notice 2015-13: Providing Transition Relief For Employers Submitting Late WOTC Applications

We Have Been Waiting For This!

The IRS has released IRS Notice 2015-13, which provides transition relief given the late retroactive renewal of the Work Opportunity Tax Credit program in December 2014. Notice 2015-13 waves the 28-day deadline for submitting IRS Form 8850 (the WOTC Pre-screen Notice) for qualifying employees hired in 2014.  The extended deadline for submitting the applications for affected employees is now April 30, 2015.

From the Notice:

 

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Written by | Posted in Affordable Healthcare Act • Africa • Audit • Corporate • Federal • International • IRS • North America • Partnership • State And Local Tax (SALT) • State Tax • Tax Controversy • Tax Deductions • Tax Policy

Walking On Eggshells, Episode II: Attack Of The Fraud Examiners

When we last left our anthropomorphic friends (see video below), Rigby was in a serious coma due to an allergic reaction from the eggs in the Eggscelent omelet, and doctors were not optimistic about his chances. Meanwhile, Mordecai discovered a long-lost journal from a former park employee that may hold the key to winning the challenge and the coveted trucker’s hat.

More to the point, when we last left our anonymous CFO and the company’s intrepid legal team, they were preparing for an “eggshell audit” from a government investigator. A Kovel Agreement can encourage open dialogue between professionals by expanding the attorney-client privilege, and there are certain things that government auditors can and cannot do. But what exactly are they looking for when they arrive? And how can you be ready? Read More

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The Church Audit Procedures Act – Part Two

In Part one of this series, we examined the basics of the Church Audit Procedures Act.  In this Part, we are taking a look at what measures a church can take to be prepared in the event of an IRS examination.  These steps are not just to ward off the IRS, but are just good, basic business practices.

First, understand that there is not a high risk of your church being the subject of an IRS examination.  Although the IRS does not disclose such data, it is estimated that fewer than 100 churches per year are examined.  Those subject to such audits are those examining the most conspicuously bad behavior.  There is a higher chance that the Department of Labor would examine a church for violation of the Fair Labor Standards Act, but that is a topic for another time.

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The Church Audit Procedures Act – The Basics

There is a concern among many that the IRS will come sweeping down on their church, ruthlessly coming in and examining every nuance of the church, upsetting its operations, and causing general disruption and loss of reputation for the church. There are established procedures for the IRS in initiating an examination, so the above is not likely to happen. This is the first of two articles on the Church Audit Procedures Act. Here we are going to examing the basics of the law and the protections it affords to churches. In Part 2, we will examine what the church needs to be doing in the event the IRS come knocking.

History

The Church Audit Procedures Act was passed by Congress in 1984. Its intent was to protect churches from its constitutional separation of church and state, while allowing the IRS to Read More

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