Fortunately, most taxpayers will never have to deal with the feared IRS audit (also called an examination). Historically, less than 1 percent of all individual tax returns are selected for audit each year. However, the likelihood of an audit increases based on several factors, including the amount of money you make, the complexity of your tax return, the type of deductions you claim, whether you own foreign assets and whether you are engaged in a closely held business.
If you or your business are selected for an audit, you will receive a letter in the mail. The IRS will never call to inform you of an audit. The IRS may have selected you at random based on some of the factors mentioned above, due to a simple mathematical error, or a claim of failure to report all income.
The law specifically places the audit burden on the taxpayer to demonstrate that the information shown on the tax return is correct. IRS auditors say that the biggest reason for adjustments is poor recordkeeping and not taxpayer dishonesty. To prepare for the audit you will need to gather and organize all pertinent tax records. A qualified tax professional can ensure the audit process runs smoothly and efficiently by making sure the IRS gets the requested information and nothing more. Consult a Tax Attorney, CPA, or Enrolled Agent for assistance as these are the only three professionals permitted to represent you before the IRS. These professionals can advocate for you and navigate complex tax rules, minimizing penalties or liabilities. Our firm has Tax Attorneys, CPAs, and Enrolled Agents on staff to assist you.
Please feel free to reach out to me if you receive any tax notices from the IRS (or other tax authorities). We are here to help.
Jeffrey Cohen, Esq., C.P.A.