If you are being audited, you’re going to suffer some damages, be it in time, comfort, convenience or money. What you can do is control the amount of damage.
What Does a Tax Audit Look Like?
Line-by-line audits
These tax audits request information about everything you do and all your financial information. The IRS is seeking unreported income. The first two lines request 13 months of business bank statements and 13 months of personal bank statements. The IRS’ goal is to find money you haven’t reported. The Service focuses less on the deductability of each expense than unreported income. IRS Commissioner Eberson applied the 80/20 rule, understanding that the IRS collects 80% of its tax in the first 20% of the audit. The IRS performs a piercing examination, looking for hidden income in the most common places.
Lifestyle audits
These new tax audits examine every aspect of your lifestyle: everything you spend money on, every dollar that comes in. They’re complicated, lengthy and painful.
Tax Matters Solutions recommends representation for six reasons
- 9Representing yourself in an audit would wrack your nerves.
- 9A representative will act as a buffer between you and the IRS, giving you peace of mind.
- 9A tax specialist will minimize the length of time the audit will take. Many taxpayers draw out an audit by withholding documents. A representative can help you move through the audit as quickly as possible.
- 9A tax accountant can explain to you your rights pertinent to your situation. For example, if you run a business from your home, you have the right to refuse entry to the IRS, but only if you state this right.
- 9A tax specialist will help control the damage.
- 9A tax representative knows the rules of the tax game and can help you avoid loss and maintain as much privacy as possible.
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