Tax Problems

Tax Audit

You have the right to representation during an audit. Since most audit notifications are computer generated, they may or may not be correct.

A couple preparing for a tax audit

“A qualified tax attorney can attend the audit for you, work to limit the scope of the exam, and use the law and facts to successfully advocate and defend your position.”

- Alyssa Maloof Whatley

A concerned woman who got an IRS letter

I Got A Letter From The IRS.
What Should I Do?

While some tax audits are easily resolved, others can get rather complicated. No matter what type of audit you’re facing, the Taxpayers Bill of Rights grants you the right to have a representative present during an audit.

If you’ve received an IRS letter informing you of the agency’s intention to audit your current or past years’ tax returns, it’s important to reach out to a qualified tax attorney as soon as possible. An experienced representative can help you adequately represent your tax position, limit the scope of an IRS Audit, and most importantly attempt to keep the audit on the civil side to minimize potential liability and exposure.

A tax attorney will be by your side throughout the entire process to make sure your documentation is in order, that everything provided to the IRS accurately supports your tax audit case, and be prepared to negotiate on your behalf.

Are There Different Types of Tax Audits?

There are four different types of exams conducted by the IRS. Of the four, correspondence audits are the most common and account for up to nearly 75% of exams. Typically a correspondence exam is conducted via mail and is seeking information or to clarify some aspect of your return. Correspondence exams are usually very limited in scope.
 
Field and Office audits are more serious. These types of audits also ask for information or clarification about your return, but the IRS takes it a step further. During a field or office audit the agency representative will investigate your lifestyle, income, and business activities to see if they support the accuracy of your filed return.

Are There Different Types of Tax Audits?

There are four different types of exams conducted by the IRS. Of the four, correspondence audits are the most common and account for up to nearly 75% of exams. Typically a correspondence exam is conducted via mail and is seeking information or to clarify some aspect of your return. Correspondence exams are usually very limited in scope.
 
Field and Office audits are more serious. These types of audits also ask for information or clarification about your return, but the IRS takes it a step further. During a field or office audit the agency representative will investigate your lifestyle, income, and business activities to see if they support the accuracy of your filed return.

Different Types of Tax Audits
Different Types of Tax Audits
From left to right, Alyssa Maloof Whatley, Harrison Kulp, and Kiara Maxie
Tax Audit Trigger

What Triggers A Tax Audit?

If you received a letter from the IRS, typically correspondence audits deal with unreported or underreported income, incorrect filing status, dependents, refundable credits like the earned income tax credit or child tax credit, itemized deductions, or Schedule C business expenses.

The IRS uses software to verify information on your tax return. They have created models and if your information appears to deviate from the norm for your filing status, income level, household size, and where you live, it could trigger an audit.

What Happens If You Ignore An Audit Request From The IRS?

Nothing good comes from ignoring the IRS. However, the good news is the IRS cannot assess your tax without giving you the right to due process and an opportunity to be heard. If you do not file a response or the IRS still does not agree with your position, the IRS must issue a Notice of Deficiency, which gives you the taxpayer, the right to challenge the government in the United States Tax Court.

“With just 30 days to respond, you can limit your available options simply by waiting too long to reply. ”

- Alyssa Maloof Whatley

A CP2000 Tax Audit

Is A CP2000 A Tax Audit?

If you’ve received a CP2000 – an underreporter inquiry notification – something in your filed tax return doesn’t match up with information the IRS has received about your wages or income from other third party sources.

A CP2000 isn’t technically an audit, but for all intents and purposes it behaves like one.

Taxpayers have a right to contest the penalties and appeal, so making a timely response is crucial. A qualified tax attorney can help by reviewing your situation and determining what your best course of action will be.