Surviving an IRS Tax Audit Examination

IRS Audit Examanations Defense 

Taxpayers call them audits; the Internal Revenue Service prefers the term, examinations.  But whatever word you use, there is no mistaking that it describes one of life’s most dreaded experiences-the government probing into your financial affairs to find a way to extract more taxes from you. 

Congress has granted the IRS wide powers to examine your finances, even allowing them to question other people about your financial affairs to determine if you are being truthful.

In recent years, due to budget cuts which has led to fewer IRS personnel, the number of audits dropped 16% in 2017, which is the sixth year in a row for fewer audits according to the IRS.

So if you are one of the unfortunate 0.84% of individual taxpayers that have been audited the past year (do not feel bad, the chances are closer to 50% that each one of us will be audited at some point in our lifetimes) you need to start building your defense as over 80% of the people who are audited end up owing additional taxes. But do not worry, as experienced tax pros, Genesis Tax Consultants, can spot probable audit issues.

What is an Audit?

An audit is the process where the IRS determines if you properly reported all of your income, from all sources, and claimed the proper credits, deductions, and exemptions.

The IRS is trained to find something needed in order to make a determination that you made mistakes, which will allow them to assess you with additional taxes, penalties, and interest which will grow quickly if unpaid.

The burden of proving that you correctly claimed any credits, deductions, and exemptions is on you, not the IRS. This means the IRS is taking the stance that you are guilty until you are proven innocent, and they win over 80% of all audits (mostly because people cannot verify what is on their tax return).

The biggest reason for the IRS winning such a high number of cases is not because taxpayers are dishonest, rather that they have poor record keeping, which IRS auditors are quick to admit to.

Things that increase your chances of an audit:

·         Being self-employed

·         Earning over $100,000

·         You didn’t file a tax return

·         You are claiming more deductions than most similarly situated taxpayers

·         Comparative size of an item to the rest of the return

·         A item on the return that is out of character for the taxpayer

·         An item that is reported in an inappropriate place on the return

·         Evidence of intent to mislead the IRS on the face of the return

·         Losses from businesses and investments claimed on your tax return

·         Amended Tax Returns

How Much Tax Law Do You Need to Know to Represent Yourself in an Audit?

Tax law is complex, contradictory, and confusing. It is found in over 100,000 pages of IRS regulations, Letter Rulings, Manuals, Official Publications, and Revenue Rulings and in thousands of federal court decisions that describe how the tax laws are to be applied in individual cases.  

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Available for all taxpayers in every state and all Expatriates living abroad. 

☎ CONTACT NICHOLAS HARTNEY, EA

nick@genesistaxconsultants.com
and tell me about your situation. 

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