TaxConnections

 

Access Leading Tax Experts And Technology
In Our Global Digital Marketplace

Please enter your input in search

Tag Archive for IRS Audits

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.

Read more

How IRS Audits Can Become Criminal Investigations

Venar Ayar, IRS Audits
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.

Read more

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:

Read more

Reasons The IRS May Audit You

Venar Ayar, Reasons IRS Audits 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.

Read more

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.

Read more

Appeals Court Finally Affirms One Million Dollar FBAR Penalty

Ephraim Moss, Tax Attorney

In a rather swift and harsh judgment, the Ninth Circuit Court of Appeals affirmed a lower court’s decision in favor of the IRS, which assessed an approximately $1.2 million penalty against a taxpayer for failing to disclose her financial interests in an overseas account.

The decision, U.S. v. Bussell, is noteworthy for two reasons. First, it shows the magnitude of penalty that can be reached, even with respect to an individual and a single foreign account and tax year (in this case, the relevant tax year was 2006). Second, it shows the type of taxpayer arguments that courts will likely reject when reviewing an FBAR penalty case. Read more

The IRS Is Not Calling To Arrest You!

Today, a new client appeared in my office and explained he needed a consultation right away. This is very strange because most people call to set up an initial conference and we discuss the case on the telephone before meeting. This man was middle-aged, dressed nicely, said he was an IT analyst, but was sweating and extremely nervous. I asked him “what is wrong?” He told me “the IRS called and said they had audited my tax returns, I owe a lot of money, and unless I contact the Restitution Department they are coming to arrest me.”

I immediately told him this was a scam. He was still very concerned. So I asked him for the telephone number of the so called “IRS” and I called using my speaker phone. The person answered “IRS Department.” I immediately knew this was a scam because no Read more