Did you know that the IRS audited 626,204 returns during FY 2021?
Tax season can be a stressful time for many, and the prospect of an IRS audit is even more daunting.
An IRS audit can be intimidating and overwhelming, especially if you don’t know what to expect or how to prepare. You may feel like you have nowhere to turn for help or advice on how best to handle the situation.
Thankfully, there are tax lawyers who specialize in helping individuals navigate through the process of an IRS audit. Keep reading for five things you should know about IRS audits so that you can make informed decisions with confidence.
5 Things You Should Know About IRS Audits
Although the IRS has some wiggle room to select which taxpayers will be audited, certain criteria must be met for an individual or business to be flagged for an audit. They include:
1. Most Audits Are Conducted by Mail
They complete the majority of IRS audits through a “correspondence audit” instead of the traditional field audit, which involves an in-person meeting. With a correspondence audit, the IRS will send you a letter requesting additional information or documentation to support your tax filings.
2. Audit Rates and Types Vary
The type of audit you may be subjected to depends on the complexity of your tax situation and any potential discrepancies that have arisen with previous filings. The IRS has three levels of examinations—correspondence audit, office audit, and field audit—which they apply in escalating order of severity.
3. There Is a Statute of Limitations
The statute of limitations is an important rule to keep in mind when filing taxes, as it determines how long the IRS has to take action. Once you’ve filed your taxes, the agency has three years to initiate an audit.
This can increase to six years if the IRS suspects that your reported income figures are significantly lower than what they should be. It’s always wise to leave yourself plenty of time if the government requests more information or scans through your paperwork more closely – better safe than sorry!
4. You Can Represent Yourself
It is possible to go through an audit without a tax lawyer, although it’s not always the best idea. Tax law is complex and ever-changing, so it pays to consult with a qualified professional if you don’t have experience dealing with the IRS.
5. You Have Rights
The IRS must follow certain procedures during an audit, and you have various rights as a taxpayer that must be respected by agency representatives. Familiarizing yourself with these rights can help ensure that your audit goes smoothly and that you aren’t taken advantage of by the IRS.
How Can a Tax Lawyer Help?
There are many ways a tax lawyer can help you during an IRS audit. Let’s look at them now:
A Tax Lawyer Can Help You Understand the Audit Process
Understanding the audit process can be overwhelming, but working with a tax lawyer can provide you with the expertise and assurance that you need to navigate the situation. A qualified lawyer will be able to analyze your financial records and utilize their experience in tax litigation to explain how to best move forward during an audit.
They’ll also ensure that you meet all deadlines, as well as advise whether it is in your interest to challenge the government’s request. With a tax lawyer at your side, you can rest assured that any matters of taxation will comply with the Internal Revenue Service’s code and reduce the stress associated with auditing your taxes.
A Tax Lawyer Can Advise on Best Practices
A tax lawyer is a valuable asset to anyone navigating the complexities of the IRS. They can guide how to best answer requests and interact with the IRS during an audit.
A good tax attorney will know about the latest changes in legislation relevant to compliance, as well as stay current on all anticipated or disregarded regulations to maximize any legal exemptions or benefits which can be sought by taxpayers.
He or she can also advise on best practices when approaching any type of negotiation or determination surrounding taxes to secure the best possible outcome for you and your company/ business.
A Tax Lawyer Can Represent You in Court
Depending on the type of case, a tax lawyer can use their knowledge and skills with the law to make sure you get the best outcome possible. They’ll analyze each situation to find loopholes and legal options that can benefit their client’s interests, knowing how important it is to have a top-tier legal representative.
From providing advice to jury trials and appeals, tax lawyers provide critical assistance across many aspects of the court process. Whether you’re dealing with tax issues or plan to dispute taxes in court, having an experienced tax lawyer in your corner can be invaluable throughout proceedings.
A Tax Lawyer Can Help Reduce Penalties
The outcome of an audit is often determined by how well you have prepared, and a tax lawyer can help ensure that your documents and information are in order. Your attorney may even be able to negotiate for reduced penalties or other favorable outcomes if the audit results in an unfavorable decision.
Want to Learn More About IRS Audits?
IRS audits are a reality for many taxpayers, but it doesn’t have to be an overwhelming experience. By understanding the audit process and being aware of your rights as a taxpayer, you can ensure that you’re prepared for any issues that arise during an audit.
If needed, enlisting the help of a qualified tax attorney can also provide additional peace of mind when navigating through IRS proceedings. No matter what happens during an audit, remember that taking proactive steps toward preparing yourself is key to avoid further complications in the future.
You can also check out this article on Cheapest Tax Service For Self-Employed.
