Receiving a notice that you have been selected for an IRS audit can be unsettling. IRS audits can lead to an in-depth investigation of your personal or business finances over the past few years. A best-case scenario involves the hassle of dealing with complex paperwork and a stressful appointment. A less agreeable resolution will involve paying back taxes, fees, and even the possibility of facing a criminal investigation. Learning best practices for preventing a tax audit in Richmond can help you avoid falling under IRS scrutiny. If you have questions or concerns regarding tax law or accurately filing your return, a skilled IRS tax attorney could help.
It should be a relief to know that most tax returns are not audited. However, the IRS uses various methods to choose between one and two million returns to audit each year. Audit requests are typically related to data that suggests an individual or business paid an accurate amount of taxes. Methods for choosing which Richmond returns to audit include the following:
Modern computing systems allow the IRS to identify patterns or trends that suggest a tax return is worth auditing. A specialized computer program uses data to analyze tax returns against what is typically normal for similar situations or income levels. Tax returns that stand out as unusual are more likely to be audited.
The IRS sometimes receives referrals from individuals who suspect someone is underpaying on their taxes. Similarly, an audit investigation of one return can lead to audits of related returns.
Employers and businesses are required to report money paid to employees and clients. If reports show something different than what is reported on a return, the return is likely to be audited.
Details that do not add up are likely to flag a return for an audit. This can be related to mathematical errors, excessive deductions, or other reportings that seem unlikely based on income.
Accurate and error-free tax returns are the best way to prevent a Richmond audit. The IRS follows strict rules regarding allowable deductions, dependents, and income reporting. Returns with suspicious claims are more likely to be investigated. The following best practices for filing tax returns can help individuals and businesses avoid audits.
While these tips are not a guarantee you will avoid an audit, they can help you prevent raising common red flags.
Upon receiving an IRS notice or letter, taxpayers have the option to file a dispute. The IRS notice will include instructions for the individual to follow if they do not agree with what the letter says. Typically, filing a dispute involves providing a written statement describing the disputed items and submitting supporting documents for the IRS to review. An experienced tax lawyer could help taxpayers determine if a dispute is likely to yield a favorable outcome and assist with submitting the correct documents.
Preventing a tax audit in Richmond is easier than you may think and well worth the effort. However, tax laws and codes are complex, making it easy for the average taxpayer or business owner to make mistakes. If you have questions about filing an accurate tax return or you have received an IRS audit notice, an experienced attorney can help. Contact us today to schedule a consultation.