Many people like the feeling of being frightened while watching a scary horror movie. However, when they leave the movie theater, not even fans of horror films like the frightening feeling that comes from having just received notification from the Internal Revenue Service – usually a letter in the mail, but sometimes a phone call – that their federal tax return has been selected to undergo an official Examination of Return, otherwise known as the dreaded “IRS audit.”
The IRS has several methods for choosing which returns to audit. One method is random sampling, which means the agency may choose to audit your tax return for no reason other than it is in the universal set of all tax returns. This is the one selection method where your luck, good or bad, comes into play.
Being audited does not mean you are suspected of having filed a false return, but if an error is found you will be held accountable for the taxes you owe. If you receive notification of an IRS audit, but it does not indicate a specific reason for the examination, then it was probably just an unlucky day when the random sampling process selected you to be audited.
The other reasons the IRS might choose to examine your tax return – computerized screening and comparisons of information from multiple sources – are primarily based on a noticeable discrepancy within your tax return, intentional or not, rather than just bad luck. You cannot always prevent an examination of your return, but following a few of the suggestions in this article may help: How To Avoid An IRS Tax Audit.
Regardless of why your tax return was chosen for an audit, the result is rarely that you receive a refund from the U.S. Treasury. Usually, you end up owing more taxes, as well as possible interest and penalties.
If you have unfortunately received notification of an audit from the IRS, you are fortunately allowed to have representation during the process. Given the potential serious consequences of an audit, your representative can only be an attorney, a certified public accountant, an enrolled agent, an enrolled actuary, or the person who prepared the return and signed it as the preparer.
To properly prepare for an IRS audit, so that you are not intimidated during the examination or upon hearing the results, you need accurate information and reliable advice about your rights as a taxpayer. If an IRS audits determines that you owe additional taxes, you will also need qualified and honest advise about whether you should appeal the decision and move forward with tax litigation or instead establish a plan to pay the taxes and move forward with your life.
As both a tax attorney and a certified public accountant, Connie Yi, P.C. is uniquely qualified to help prepare and guide you through a stressful tax audit. The IRS guidelines for representation during an examination specifically mention your lawyer and accountant as being the first and second most important sources for assistance. The Law Offices of Connie Yi, P.C. can provide experienced legal and accounting counsel about your tax examination from a single source, which we feel offers you the best of both worlds through just one personal and private relationship.
We can help you manage all aspects of your IRS audit from a unified perspective and approach, which can maximize your chance for a positive outcome and minimize any additional tax you may owe. We will coordinate all aspects of your Examination of Return, from the initial investigation of your tax return and documentation, through case preparation and representation at your IRS audit. For a free consultation about a pending IRS audit, contact us today.