A common fear shared among most Americans is being audited by the IRS, given the uncertainty of what the process ultimately holds out for them. Everyone knows that the taxman never takes lightly any mistakes on tax returns and that the auditors always strive to ensure high levels of compliance. Nonetheless, most of the fears about the IRS tax reviews are irrational as getting to face an audit never means that one is on the wrong. This is because while the selection for an investigation by the taxman can be intentional as a result of raised red flags, most of the cases are random. As such, the IRS does not only reach out to taxpayers because of their mistakes but as part of their mandate. In doing this, the body gets to maintain touch with the taxpayer and consequently adopt better policies or systems for compliance.
Over the past years, the IRS has equally undergone massive changes that have seen the number of audits conducted go down. These changes have primarily been a result of the Tax Cuts and Job Act that have seen the agency significantly reduce its staffing. It is therefore not surprising that reports from the fiscal year 2018, shows that from over 196 million filed tax returns, only about one million were audited. This indicates that the IRS reviews less than 1% of the total tax returns received, and even from this number, most do not end up paying any penalties. Still, it is crucial to give these audits much attention as they have become more thorough and comprehensive for most cases. This has resulted from the agency seeking to gain more value from the process given the low percentage they currently focus on.
The way forward if you have an upcoming tax audit
If you get selected for an audit, it is crucial that you get prepared to adequately address all concerns from the taxman without raising more suspicion. Luckily, every call for an IRS examination comes with clear instructions on the information that is required from you as a taxpayer. In most cases, the focus is on the previous three years of your tax returns according to the statute of limitations. However, there are exceptions to this rule, and for substantial errors in your filing or tax evasion cases, the agency can go back six years. A deep understanding of the audit process is, therefore, the first step to having the much-needed clarity on what to expect. The best part is that you have a lot of rights, and even for the worst-case scenarios, there is sufficient room to prepare for your tax defense.
As a taxpayer, you do not need the IRS on your back longer than they should be, and to achieve this, you should never give them a reason to stay. A practical way to avoid any mistakes right from the start is by seeking IRS audit help from seasoned tax professionals. Trying to navigate the complicated world of taxation alone is primarily the first step to lots of frustrations. This is because even what might look like a simple audit query can quickly become a challenge to handle if you do not have any legal and taxation know-how. A tax attorney saves you from all this as they bring with them a deep understanding of the audit process and grasp of the tax laws used by the agency. By having these professionals by your side, nothing is left to chance as the right course of action is provided from the very beginning.
The first step to making a tax examination simpler is by providing a complete response to the IRS after receiving a notice for audit. Tax attorneys will carefully go through the provided audit notice and leverage on their knowledge to come up with the best response. Most of the time, this avoids any further actions, but if the auditors want to meet, then you still have the right representative by your side. The attorney will professionally communicate your tax position with the IRS and resolve any issues while mitigating lots of risks. Most importantly, tax attorneys will not only play a role during the audit but in the progressive stages of appeal and litigation if it gets to these stages.