IRS Audit | TaxConnections

27 Jan 2022

IRS’s Imperfect Designation of “Immediate Supervisor” Deemed Insufficient To Overturn Penalties

Tomato, Toma-toe: IRS’s Imperfect Designation of “Immediate Supervisor” Deemed Insufficient to Overturn Penalties Under Code Section 6751(b)(1)

Section 6751(b)(1) of the Internal Revenue Code provides that “[n]o penalty under this title shall be assessed unless the initial determination of such assessment is personally approved (in writing) by the immediate supervisor of the individual making such determination[.] . . .” 26 U.S.C. § 6751(b)(1). In the Tax Court opinion of Long Branch Land, LLC v. Commissioner, No. 7288-19, T.C. Memo. 2022-2 (U.S. Tax Ct. Jan. 13, 2022) (mem. op.), the court addressed what is meant by “immediate supervisor,” as that term is used in Section 6751(b)(1), as well as the doctrine of “presumption of regularity.”

In the case, Long Branch Land, LLC (“LBL”) claimed a $10,425,000 charitable contribution deduction for a conservation easement it granted to a charitable organization as well as a $3,475,000 charitable contribution deduction for LBL’s donation of a fee simple interest in real property associated with that easement. The IRS selected LBL’s return for examination.

Written by Cory Halliburton | Posted in IRS Audit • Section 6751(b)(1)

23 Feb 2021

How To Know It’s Really The IRS Calling Or Knocking On Your Door: Audits

The IRS examines or audits tax returns to verify that what the taxpayer reported is correct. This doesn’t mean that the taxpayer has made an error or been dishonest. In fact, some examinations result in a refund to the taxpayer or acceptance of the return without change.

There are various reasons the IRS may telephone or visit a taxpayer at home during an audit, but at that point the taxpayer would be well aware of the audit.

Audit Contacts

IRS employees conducting audits may call taxpayers, but not without having first attempted to notify them by mail. After mailing an official notification of an audit, an auditor/tax examiner may call to discuss items pertaining to the audit. We may visit the taxpayer’s home or business without notification to the taxpayer if attempts to communicate with the taxpayer in other ways, such as letters or phone calls, are not successful. An audit may include an interview with the taxpayer or his or her Power of Attorney, if one is appointed, and sometimes include a tour of the taxpayer’s business operation.
Read More

Written by IRS | Posted in IRS Audit

15 Nov 2019

Where To Start When You Owe The IRS

If you owe the IRS a substantial amount, be sure not to ignore it. Review options such as installment agreements, extensions, or personal loans, and always seek legal advice from a professional tax attorney.

While you may want to put off dealing with tax debt and that sinking feeling that you owe the IRS, not handling it will likely lead to additional penalties, interest, and other major consequences. If you can’t pay the debt by its due date, you still need to file a return on Tax Day and/or have your tax preparer file a six-month extension. This will give you more time to seek professional help and discover what options you have to settle the debt. To avoid this and other penalties, carefully review the action steps below.

Written by Venar Ayar | Posted in IRS Audit • IRS Installment Agreements

31 Oct 2019

10 Documents You Will Need For An IRS Tax Audit: Do Not Be Afraid!

It’s a nice breezy day. You pick your mail up, excited because that vintage Captain America comic you ordered came in today. But, alas, instead of nerding out all afternoon, you find yourself under the covers, stressing out over a fast-approaching audit of tax your returns. Receiving a tax audit notification in the mail can be a jarring experience, especially if you spend weekends embezzling a buck or two. Fret not, for a tax audit isn’t a death sentence. In fact, if you generally avoid criminal activity, you’ll probably be fine. Okay, you’ll be fine.

What is a tax audit?

A tax audit is a formal examination into your tax returns by the IRS to either verify information or uncover fraud or inaccurate tax returns. The IRS conducts these examinations both randomly and on purpose. If they decide to investigate your financial records randomly, they will just take a closer look to verify that all the information provided is correct. However, if the IRS suspects that there are any errors or that you weren’t entirely truthful while filing your returns, they will come at you with all they’ve got. Hard.

Audit notification letters are mailed for a couple of reasons:

Written by Venar Ayar | Posted in IRS Audit

07 Aug 2018

How IRS Audits Can Become Criminal Investigations

In our day-to-day lives, one usually has to try to find himself (or herself) on the wrong side of Law Enforcement. That is of course, not counting basic traffic infringements (which are hardly considered criminal). But in all other respects, it is mostly pretty easy to go about our day and not unwittingly become the target of a criminal investigation.

Unfortunately, that is not the case with the IRS. As if they weren’t terrifying enough when they were just wearing their “civilian” hats, they become infinitely worse when dealing with the IRS Criminal Investigation Division (CID).

From Regular Tax Audit to Criminal Investigation

Shockingly, it is very common for one to be completely unaware that they have become the target of a criminal investigation by the IRS until they come knocking, and catch you with your pants down.

In fact, oftentimes they can be tipped off by the civil agent who conducted your audit if he or she stumbles upon something they deem to be suspicious in nature. They can then alert the CID which in turn triggers the investigation. In the meantime, however, they are under no obligation to inform you that they have set all this in motion (and probably won’t). And what’s worse, at this point, they will likely even suspend their audit without even an explanation. And you’ll be relieved, celebratory even, assuming that the audit is simply over.

Written by Venar Ayar | Posted in IRS Audit • Venar Ayar

25 Jul 2018

Tips For Tax Preparers To Avoid IRS Investigations

Venar Ayar, Tips For Tax Preparers To Avoid IRS Audits

Things Preparers Keep In Mind To Avoid An IRS Audit

Competition among tax preparers is fierce, but tax professionals must be careful not to run afoul of IRS regulations in their quest to grow their business.

The IRS is particularly interested in investigating tax preparer fraud because it affects so many returns. If the IRS shuts down a single corrupt tax preparer, it could prevent hundreds of fraudulent returns from being prepared each tax season.

Most tax preparers, however, are honest professionals who want to avoid accidentally creating a problem with the IRS. The following tips can help increase the odds you’ll have a successful tax season without receiving any unwanted mail from the IRS:

Written by Venar Ayar | Posted in IRS Audit • Tips For Tax Preparers

09 Jul 2018

Reasons The IRS May Audit You

Contrary to popular belief, there is nothing inherently threatening or sinister about an IRS audit. During the audit, the agency will simply double-check your numbers to ensure that there are no discrepancies in your tax returns. Therefore, if you are truthful and conscientious, you do not have to worry.

At times audits are completely random; however, the IRS usually selects taxpayers on the basis of suspicious or unscrupulous activity. As a rule of thumb, it is better to avoid subterfuge. If you are worried about being audited by the IRS this tax season, the following are some red flags that may land you in the hot seat.

Errors and Omissions

It is true that mistakes often happen in life. That being said, when you are filing your tax return, you must play close attention to all details, and be meticulous. It is likely that if you make simple mathematical errors, they will be noticed by the agency, which can lead to your tax return being audited.

Written by Venar Ayar | Posted in IRS Audit • Venar Ayar

03 Jul 2018

How Long Does A Typical IRS Audit Take?

Venar Ayar, How Long Does IRS Audit Take?

The Internal Revenue Service regularly performs tax audits of both corporate taxpayers and individuals. Although tax audits are conducted year-long, they often spike during the few months after the tax season, especially when problematic or misleading returns come under the IRS microscope.

Irrespective of when an “examination” or audit commences, an IRS auditor would be assigned to your case.

While IRS tax auditors are trained to be efficient, they’re also well trained to be comprehensive and thorough – and depending, to a large extent, on the structure and complexity of the individual or company’s tax situation, the IRS audit process usually takes more time than you may estimate as a taxpayer.

This could be particularly disconcerting to taxpayers who face an egg shell audit case in which the main goal is getting the IRS audit closed as early as possible in order to mitigate any criminal or civil tax exposure which underlies an audit.

Normal Circumstances

In a majority of cases, the IRS would wrap up their tax audit within one year. Even though the agency has up to three years to audit a tax return, the IRS prefers to conclude audits before the expiration of the statute of limitations.

Written by Venar Ayar | Posted in IRS Audit