Workers, business owners, and individuals who are self-employed have an obligation to submit tax returns and pay what they owe the Internal Revenue Service (IRS). In most cases, the process goes smoothly. However, in certain situations, IRS Revenue Agents may manually review your return and request documentation through an Information Document Request on a Form 4564.
If you have been notified that your tax returns are being audited by the IRS and a Revenue Agent or Tax Compliance Officer, the support of an experienced tax attorney could benefit you and improve your chances of success. Talk to a Baltimore IRS audit lawyer today to learn more.
The IRS conducts four types of audits used in various circumstances, with some being more intrusive than others. An attorney in Baltimore could answer your questions about each type of IRS audit.
The IRS’s correspondence audit is the most common of its four options. Federal authorities send a letter to the taxpayer requesting additional information regarding certain items on their tax return. These audits are often resolved by submitting additional documentation via mail.
In cases where the IRS questions are too complicated to resolve via correspondence but an on-site investigation is unnecessary, agents opt for an office audit. The taxpayer must appear in person for an office audit and bring the requested documents.
Sometimes, the IRS is only satisfied if it visits a business and reviews its records on-site. This is the most intrusive of the four options. Federal agents must coordinate with taxpayers when scheduling these audits. These investigations often start with a specific issue on a return but can quickly extend to a variety of additional business records and documents.
The least common of the four options is the Taxpayer Compliance Measurement Program audit. This is part of a program the IRS operates to analyze the tax information of approximately 50,000 returns. These returns are used to create a discriminant function (DIF) score that identifies any unusual or unexpected information in the filings.
While the IRS does not disclose exactly how it chooses each return to audit, certain factors are more likely to attract its attention. Understanding these aspects can help you avoid audits in the future.
First and foremost, federal authorities will look for red flags, including late or no filings, during the return filing process. The presence of other factors, such as a company that operates primarily in cash, can also lead to audits.
Regardless of the reasoning behind audits, they can disrupt your business. The good news is that an IRS audit lawyer in Baltimore could assist you in any of these situations.
Protecting yourself and your business is vital if you have been notified of an impending audit. The sooner you speak to a Baltimore IRS audit lawyer, the better your chances of resolving these issues and securing a positive outcome.
Do not put yourself at risk by dealing directly with the IRS. A mistake could be costly and have long-term consequences. Contact us today to discuss your options.