IRS Audit Lawyer

The IRS audits taxpayers to minimize the “tax gap.” This is the difference between the amount of money that the IRS expects to receive from taxes and the actual amount it receives. Auditing serves this purpose in two ways. First, it double-checks the results of certain tax returns to ensure that they match expectations. Second, it deters people from being sloppy or attempting to be deceitful.

Tax returns are sometimes selected at random. However, they are more often selected based on some sort of suspicious element in return. These are some examples of why someone may be selected to be audited:

• Mathematical Mistakes: Sometimes, people just make calculation errors. If there is something that doesn’t quite add up (literally), then the IRS may audit your return. This is growing less common as more people prepare their returns digitally.
• Too Many Donations: Charitable donations are a great way to give back to the community. They are also an opportunity to save a little money on your taxes (though never more than the donation itself). However, if you have too many or suspicious donations, it may result in an audit.
• Overly Neat Numbers: Finances are rarely in totally round numbers. While you should round to the nearest dollar, you should not round any further. If everything on your tax returns ends in a zero or a five, that is a bad sign.
• Unreported Income: It is probably no surprise that not reporting income is a quick way to get audited. Of course, this may simply be an error of omission. Intentionally avoiding reporting income could land you in hot water quickly.
• Too Many Deductions: There are lots of deductions you can make on your taxes legitimately. However, if you have a lot of deductions, particularly relative to your total tax bill, the IRS may audit you. Home office deductions are particularly targeted due to a substantial amount of fraud.

During an audit, the IRS will review your records and compare them with your tax return and other data that the government may have. For example, this may include income reported by an employer and other tax filings you have made. They may make requests for documents either in-person or through the mail (the IRS will not call or email you about an audit). You can request an in-person interview if you prefer.

Exactly what happens during an audit and how long it lasts depends on the severity of your situation. If you have been honest and diligent, it should be relatively painless. However, sloppy mistakes or intentional fraud could come back to bite you.

IRS tax audits are not necessarily a reason to panic. However, they can also be a serious problem, especially if you have been a little too “creative” with your tax filings. Even if you have been perfect with your tax returns, dealing with an audit can be a bit of a hassle. It is good to get professional help, especially if you have a relatively high income or complex taxes. An IRs specialist can help you determine your next steps.

Getting audited if you have incomplete records is not a very good situation. The IRS says that you should keep your tax records for at least three years. If there is no fraud involved (for example, if you simply made a mistake), the IRS cannot audit you beyond those three years. However, if there is fraud, you could still get audited at a later point.

If you have incomplete records and get audited, the IRS may pull information from other sources and be less likely to agree with your calculations. What happens depends greatly on the specifics of your situation. This is a good situation to work with a tax lawyer. They will be able to advise you on how to proceed.