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How Far Back Can You Be Audited By The IRS?

According to CBS News, filing your tax returns could raise the question of how long you should keep them, just in case the IRS decides to audit. If you come across this issue, it is important to be aware of the three types of statute of limitations. This is found under the Internal Revenue Code, provided by Section 6501.

The first is a three-year statute of limitation on tax audits. Filing a tax return on extension has the downside of also extending the time your return is subject to an audit. For example, filing a tax return for 2011 on April 15, 2012 would give the IRS exactly three years to audit it. However, if you request an extension and file on Oct. 15, 2012, the IRS will still receive exactly three years after that date to audit your return.

Section 6501 also states a second statute of limitations. Overestimating your cost basis or holding securities for a long period of time could bring forth underreported income. This could result from taxpayers neglecting a gross income that surpasses 25 percent of what was originally stated. In this case the three-year limit is doubled to six years.

Assessing a tax return has no time limit if a return is false or fraudulent according to the third statute of limitations. This will also occur if no tax return is filed at all.

Having a good understanding of these three bills as well as an effective tax attorney, can prevent future questions or frustrations with filing tax returns.

Tax problems? Call us today for a free consultation. We are a team of Lawyers, CPA’s and Enrolled agents who Specialized Exclusively in Tax Audit Representation with over 15 years of experience. We are located in Beverly Hills, California. Our services are nationwide. We work with all IRS offices throughout the nation. Because the IRS is a Federal Agency, we can request your case to be transferred to a local IRS office (Los Angeles, California).

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What Is A Tax Audit And Why Is It Done?

A tax audit is when the IRS decides to examine your tax return a little more closely and verify that your income and deductions are accurate. Typically, your tax return is chosen for audit when something you have entered on your return is out of the ordinary.

There are three main types of IRS audits:

  • A Mail Audit simplest type of IRS examination and does not require you to meet with an auditor in person.
  • An Office Audit is an in-person audit conducted at a local IRS office which are more in-depth than mail audits and usually include questioning by an audit officer about information on your return.
  • Finally, a Field Audit in which case an IRS agent will conduct the audit at your home or place of business.

The IRS might select you to be audited if:

  • There are mistakes or math errors on your tax files.
  • You fail to include a Form 1099 or additional income.
  • You claim too many charitable donations.
  • You Report too many loses on a Schedule C.
  • You claim too many business expenses.
  • You claim a home office deduction.
  • You repeatedly use neat and rounded numbers.

If the IRS imposes an audit on your tax returns, contact a tax attorney for IRS audit help.

Tax problems? Call us today for a free consultation. We are a team of Lawyers, CPA’s and Enrolled agents who Specialized Exclusively in Tax Audit Representation with over 15 years of experience. We are located in Beverly Hills, California. Our services are nationwide. We work with all IRS offices throughout the nation. Because the IRS is a Federal Agency, we can request your case to be transferred to a local IRS office (Los Angeles, California).

info@irs-audit-group.com
1-888-300-6670

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How Does The IRS Notify You Of An Audit?

How Does The IRS Notify You Of An Audit?

The IRS will always notify you by mail, if you are being audited. IRS.gov states that they will never notify you over a telephone call, so if you receive a call, chances are it is a scammer trying to deceit you.

If you are selected for an audit it is not always suggested that there is a problem and it can be resolved with the help of an IRS tax attorney. The IRS uses several methods when selecting tax payers for audits.

One method is random selection and computer screening. In this case, it could be likely that your return is selected based on a statistic formula. The National Research Program, conducted by the IRS, compares your tax return against “norms” for similar returns. These “norms” are developed from audits of a statistically valid random sample of returns.

The IRS also looks into your returns if you are involved with issues or transactions with other taxpayers, such as business partners or investors, whose returns were selected for audit. This method is called Related Examinations.

After you are selected for audit, an experienced auditor reviews the return and decides whether or not to accept it. If something questionable is noted, the auditor forwards the return for assignment to an examining group.

Tax problems? Call us today for a free consultation. We are a team of Lawyers, CPA’s and Enrolled agents who Specialized Exclusively in Tax Audit Representation with over 15 years of experience. We are located in Beverly Hills, California. Our services are nationwide. We work with all IRS offices throughout the nation. Because the IRS is a Federal Agency, we can request your case to be transferred to a local IRS office (Los Angeles, California).

info@irs-audit-group.com
1-888-300-6670

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Should You Represent Yourself vs. the IRS?

Most people question whether they should represent themselves in an IRS audit or hire a tax attorney to represent them. The answer is simple: hire a tax attorney. Taxpayers will benefit tremendously from securing a professional tax expert to represent them before the IRS. Even if the tax expert doesn’t bring you a successful outcome, they often reduce, if not eliminate, any additional fee the IRS expected you to promptly pay.

Another reason not avoid represent yourself is because you might say something that will be self-incriminating and not even realize, until it is too late. Hiring a tax attorney will help you avoid making that mistake. Tax attorneys are experienced in dealing with the IRS and understand and practice tax law as a career. There is no better representation then that of a tax attorney. Auditors will also word phrases intentionally to trick you into confessing something you otherwise would not have, whereas if you had a tax expert representing you they could be ignorant to some of the questions asked, consult with you and then respond to the auditor.

Protecting your rights is another reason why you should not represent yourself. IRS auditors know that taxpayers who represent themselves are not knowledgeable of their rights and they will use that to their advantage. With a tax attorney on your side, your rights will always be protected. This can be crucial because taxpayers never want to overexpose themselves and expand the scope of their audit. Not only is it more time consuming, but it also adds more unnecessary stress to your already busy life. There are times that representing yourself can be beneficial, but for the most part having a licensed professional representing you is the best shot you have to have a successful IRS audit.

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IRS Form 1099 Or Form W-2?

Ever wonder what the difference between a 1099 Form and W-2 Form is? Well, you are definitely not alone because most people don’t know the difference, since there are so many tax forms that it is so easy to get confused. W-2 Forms are for employees and include information about tax withholding, payments to the IRS and state taxing authorities. 1099 Forms on the other hand, show the reported payments to independent contractors. Both forms are submitted to the IRS in February for review.

It is very important to correctly identify your company, as well as yourself, as either the employee or the independent contractor. This is important because the IRS will audit you if you unintentionally make an error. Furthermore, you may also get sued by the other party (either employee or employer) who will claim that you misclassified them as “employers” when they were in fact “employees”.

Another helpful form is the 8919 Form that is available on the IRS website. Some people who file a W-2 might need a 8919 Form, so it important to understand what the form is and why the IRS might require you file it along with your W-2. With an IRS Form W-2, the IRS is recognizing you as an employee who has had deductions with every paycheck. With independent contractors, there are no deductions therefore they will owe the IRS money. These tips scratch the surface of what you need to know before you file your W-2 and 1099 Forms. It is fundamental that you seek a professional opinion if you are unsure what form you need to file and what supporting documentation you need to make sure you file correctly.

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Gov. Brown Sued By Taxpayers’ Group For Passing Law That Allows Public Financing Of Campaigns

Patrick McGreevy of the LA Times claims that a taxpayer group filed a lawsuit against the governor of California for passing a new law that will allow for public funds to finance political campaigns.

The lawsuit in question was filed in the Sacramento Superior Court by the Howard Jarvis Taxpayers Association. Accordingly, they claim that such a law violates Proposition 73, which was approved by voters over 20 years ago and prohibits public funds being used to fund political campaigns.

Jon Coupal, president of the Howard Jarvis Taxpayers Association claims that “It runs directly contrary to the expressed language of the Political Reform Act”. Moreover, he states that the law cannot be changed without another vote of the people. He further argues that using public funds to finance political campaigns is far from fair because “it’s the power of government skewing the political process”. Governor Brown declined commenting on the matter.

On the other hand, Ben Allen, the congressman representing the district of Santa Monica declared that such a law would help reduce the influence of special interests in political campaigns and “anything we can do to empower communities to reduce the influence of money in campaigns is a good thing”. He stated recently that he believes the bill will survive the legal attack.

He argues that without the law, “we are powerless to offer candidates an alternative to the current reliance on special interest dollars”. Where do we, as taxpayers stand on such an issue?

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What To Do if You Receive an IRS Tax Audit Notice

You checked the mail and it happened; you received the letter. The letter that no one wants. The letter that means you are going down a path many have traveled, but few have survived. The IRS tax audit. If you filed your taxes correctly and flawlessly, you will easily prove it. But if they find errors or any miscalculations, you are in for a bumpy ride. Here are a few steps you can take to quickly resolve the situation.

Ask Why. Why was your return selected for an audit? You did it correctly, what’s the deal IRS? There can be many reasons for this to happen; here’s a few:

  • High deductions compared to your income, inconsistencies with reports from previous years
  • If you have transactions with someone else who is also being audited, you will be flagged as well
  • Computer programs that automatically flag outlier data
  • Random selection

All IRS notice letters come with a notice number that will help you narrow the scope down to specific things being questioned. This way, you can pull only the necessary information for the audit.

How are you being audited?

There are different ways to get audited, believe it or not:

  • A Correspondence Audit involves you providing documents such as receipts, checks, and other required material. This is just the IRS asking for more info.
  • An Office Audit is where it gets a little more intense. This time you have to go to your local IRS offices and the audit is conducted there.
  • If you would them to visit you personally at your office, that can be arranged with a Field Audit.
  • The most expensive audit is called the Taxpayer Compliance Measurement Program Audit. In this audit, everything is looked over very closely.

It is extremely recommended to hire an IRS tax attorney to represent you.

Dealing with the IRS can be hectic and nerve-wracking, but with an experienced licensed professional on your side, you can get through the audit stress free. Our tax attorneys represent you in front of the Board of Equalization, the IRS Examination Division and Collections Division, and state income tax agencies.

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Should You Hire A Lawyer During An IRS Audit?

For the most part, the IRS does a good job keeping track of millions of taxpayers income and how much taxes they should be forking over. Most IRS employees do their best to be fair and efficient. However, many people feel chills up and down the spine when the IRS is mentioned. Normal people want to file their taxes and be done with it all, and they certainly don’t want the IRS questioning their revenue stream.

The question is, if your name is pulled from the Audit Me hat, should you go ahead and call a tax attorney? Many individuals and organizations such as the Tea Party claim that they are treated very differently depending on whether they have a lawyer or not. Inappropriate questions and other sketchy things can happen from not being represented. Taxpayers always get better results from being represented by a lawyer throughout the whole process.

This does not mean that you have to contact a lawyer every time something gets mailed to your door. It all depends on the severity and complexity of the issue. You can contact a lawyer and ask for advice on whether they think you need representing. Sometimes representing yourself is the best option, but rarely.

Trying to handle a situation with the IRS by yourself can dig you a much deeper hole. If you are unsure what to do then you definitely need to contact a lawyer. They will make sure that whatever hole you’re in won’t get wider or deeper. They will get you out.

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Tax Troubles – Tax Attorney or CPA?

You may not be sure what to do if you are selected for an IRS tax return audit. It’s okay because a lot of people would be stuck on the same thing. There’s nothing to worry about. Hiring a tax attorney will ensure that you are stress free while tax auditors crawl through your documents and ask hard questions. Instead of you answering those questions, your tax attorney will come to the rescue every time. Below are a few of the obvious benefits to making use of a tax attorneys services.

Some people would default immediately to a CPA to help them prepare for an audit, but a tax attorney is slightly better for certain reasons. Accountants would definitely know the tax code, but would they be able to defend you in the audit situation? Accountants count numbers all day, but they don’t represent people and argue their case for them. A tax attorney can help negotiate for you and defend you in subsequent litigation. These people are paid to interpret the law to benefit you and protect you from giving away too much of your money/property.

The terminology and jargon used during the audit process can be quite daunting, so why not have someone by your side who knows the lingo and procedures like the back of their hand? A tax attorney will be your personal interpreter, and they can tell when someone is looking a little too close at things. If the auditors are trying to charge you with something, the attorney will know right away.

If your audit goes unexpectedly, you can face fines, back taxes, and even criminal charges. Your tax attorney can help in many ways throughout the entire process. Since audits are an interpretation of events, the facts will be presented in the best possible light, so that you are treated fairly. The attorney has to follow certain rules and protocols just like any other legal proceeding. They can protect your interests in case the auditor tries to pull any misconduct. For example, if the auditor asks you any inappropriate questions, your attorney can advise you on what to say. They will also use negotiation techniques that will reduce your liability a great deal.

This is just the beginning when it comes to tax problems. You need someone experienced that has seen the process over and over again. This way, they will be able to help you get through the audit without forking over all of your time and money. Spending some money on a tax attorney can keep you out of serious trouble.

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Trump’s Tax Attorney Claims the Spotlight

Donald Trump had a tax attorney in the mid-1990’s who is now trying to claim the spotlight saying that the Republican Presidential candidate had little interest in the tax code. These claims differ greatly from Trump’s Tweet saying “I know our complex tax laws better than anyone who has ever run for president and am the only one who can fix them.” James Mitnick, the tax attorney in question, claims that as far as he knows, Trump had no knowledge of taxes through late 1996. Mitnick also said in an interview with NBC TODAY that Trump wouldn’t have had the time and the patience to learn all of the tax provisions.

Who is Mitnick and what does he have to do with this? He handled all of Trumps income tax returns in 1995. Parts of these tax returns were published in the New York Times because supposedly people were very interested in how much money he made. Trump had reported a loss of $916 million! It is possible that Trump had been avoiding paying income taxes for around 18 years.

This is around the same time Trump tweeted that he knows everything there is to know about how taxes work. He has brought this up several times whilst on his campaign trail. Apparently Trump was not interested or involved in the 1995 filing. According to Mitnick, Trump was only interested in the bottom line, not the details. Mitnick claims that Ivana Trump, Donald’s wife, was more interested and asked questions about how the taxes were prepared. However, we still cannot prove what Mitnick claims because the Times reports did not expose any tax-avoidance tactics, and they all appeared to be legit. In fact, it is impossible to claim that someone had been avoiding taxes or doing anything sketchy from just one years’ worth of reports published in the Times. Mitnick confirmed this and was not pleased how the Times could come to that conclusion. He also added that himself and his accounting staff stayed well inside the law while also trying to make Trump pay the least possible tax on his income.

The Trump campaign chimed in with a statement late Saturday saying that part of Trump’s responsibilities is paying the least amount of tax possible while staying inside legal boundaries. And they also added that Trump has paid exorbitant amounts of property, real estate, city, state, employee and federal taxes. Supporters of Trump are actually saying that Trump is a genius for paying the least tax possible and would be the right man for tax reform. Of course the Clinton campaign have been trying to use the tax angle as an offensive move in debates and on the TV.

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