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Archive for IRS Audits

National Taxpayer Advocate: IRS Audits In Person

IRS Audits In Person

Most of the time, the IRS accepts tax returns as you file them. However, it selects some for an additional review or audit to determine if you reported your income, expenses, and credits accurately.

If the IRS selects your return for audit (also called examination), it doesn’t automatically mean something is wrong. Once the IRS completes the examination, it may accept your return as filed or propose changes. These changes may affect the amount of tax you owe (a proposed deficiency) or your refund amount.

There are two ways to be audited – by mail, or in person. This article deals with an in-person audit.

When the IRS selects your tax return for audit, it will notify you by mail. Sometimes the IRS will follow-up with you by phone about the notice it previously sent. The notice will tell you:
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IRS Has Begun Sending Letters To Virtual Currency Owners Advising Them To Pay Back Taxes, File Amended Returns

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The Internal Revenue Service has begun sending letters to taxpayers with virtual currency transactions that potentially failed to report income and pay the resulting tax from virtual currency transactions or did not report their transactions properly.

“Taxpayers should take these letters very seriously by reviewing their tax filings and when appropriate, amend past returns and pay back taxes, interest and penalties,” said IRS Commissioner Chuck Rettig. “The IRS is expanding our efforts involving virtual currency, including increased use of data analytics. We are focused on enforcing the law and helping taxpayers fully understand and meet their obligations.”

The IRS started sending the educational letters to taxpayers last week. By the end of August, more than 10,000 taxpayers will receive these letters. The names of these taxpayers were obtained through various ongoing IRS compliance efforts.

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How To Handle An Audit Notification

Kazim Qasim - Audits

The percentage of tax returns being audited each year has steadily declined, due in part to dwindling government resources. Still, if you’ve been notified of a pending audit, those percentages don’t mean much. The only thing that matters is the situation that you’re now in. There are two kinds of audits; in person and by mail. It’s disconcerting to receive an audit notification, no matter what kind. If you find yourself in this situation, here’s how to handle it.

Notify Your Accountant

The first phone call you should make is to your tax accountant. Your accountant will be an invaluable resource as the audit progresses, so you need to give them the pertinent date(s) of the audit to ensure the accountant’s availability. In addition, numerous financial documents will need to be provided to the auditor, and your accountant will have many of these records. They’ll need some time to get everything together and organized. The sooner you notify your accountant, the better prepared they—and you—can be.

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