Glen E. Frost is a tax attorney, active certified public accountant, and a former forensic accountant. With this extensive education and experience, he can handle your audit or appeal from the initial notice to the final resolution.
Why Was I Audited? Why Was My Business Audited?
The IRS uses a number of methods to determine which tax returns are pulled for close inspection and can result in an audit. These methods include:
- Information matching: Employers and other entities send your forms W-2 and 1099 to both you and the IRS. If the income reported on your return does not match the amounts reported on these tax forms, the return is likely to be audited because the IRS computers will notice the missing amounts when comparing the forms to your return, which they do systematically.
- Computer scoring: IRS computers will also systematically score your return based on the likelihood that you have understated income or overstated deductions. IRS agents then sort through and pick out the highest scoring returns for audit. The agents analyze the returns to see if there needs to be a tax adjustment, and if so, you will be audited and informed of what the IRS calculated your tax liability to be.
- Abusive tax avoidance transactions and foreign accounts: If you are suspected of participating in or promoting tax avoidance, or if you have foreign bank accounts, you can expect greater scrutiny.
- Related examinations: If your business partner or a similarly related party has been audited, there is a good chance that your return will be audited as well.
In addition to the above, returns may be selected for an audit due to local campaigns, such as compliance initiatives, or as the result of information provided by informants.
What If I Don’t Agree With the IRS’s Assessment?
Although it sometimes may not feel that way, you do have rights when the IRS is investigating you. Some of these rights include:
- The right to representation – you can choose to retain an attorney to speak with the IRS on your behalf, and
- The right to appeal, both within the IRS and before the courts
You generally have appeal rights within 30 days of receiving an IRS adjustment to your return. It is highly advised that you contact an attorney as soon as you receive your letter because those thirty days can go by quickly. It is important to note that your appeal must be filed in thirty days, not one month, and that an appeal that is one day late is not timely and will not be accepted. Contact a Vienna IRS Tax Litigation Lawyer to learn more about your appeal rights and whether you should appeal within the IRS first or skip straight to Tax Court.