If you have received a letter from a tax agency, it is imperative you respond. In addition, having a tax expert on your side to defend your position can only help. San Diego Tax & Financial Associates employs Enrolled Agents who can help.
Enrolled Agents are the only federally licensed tax practitioners who specialize in taxation and also have unlimited rights to represent taxpayers before the IRS. We know the tax code. Going into an audit without proper representation is akin to defending yourself in a criminal court.
The professionals at San Diego Tax & Financial Associates are tax experts you want on your side!
BELOW ARE THE 4 COMMON TYPES OF AUDITS
This is not really an audit. If your notice has CP-2000 written on the header or bottom of the page, then they are simply requesting additional information.
These notices are often sent to request information about income not reported on your original tax return. Sometimes this income was actually reported on the return, but the IRS was unable to match it up with the records on their end.
Your letter will include a “worst-case” tax calculation with a demand for payment. Oftentimes, we can reduce the increased tax and penalty demand.
If your letter has “566(CG) typed on it, this is an audit conducted by mail. They are generally looking for you to substantiate deductions on your tax return. Do not take this lightly. Do your best to provide every scrap of evidence to support your position. This type of audit is generally very specific as to what they are questioning on your return. Most of the time they are focusing on issues like: business deductions, unreimbursed employee business expenses or itemized deductions. If you can support your deductions, the audit can be resolved quickly.
We can help you assemble your substantiating paperwork in a manner the auditor will easily understand. We understand the tax code and more importantly, your rights as a taxpayer.
The IRS uses Letter 3572 to inform you of an audit. They often use this form when they want to visit with you in person – either at your home or business or in their office. The IRS could have outlined the issues on the front page of the Letter 3572 but they often use Letter 3572 in conjunction with Form 4564 or a Form 886A to request information from you. It is very dangerous to meet with the IRS.
The IRS will want you to answer their questions. They will likely want your bank accounts & income evidence but more often, they want deduction proof from you – and the burden is on you to prove your case. So, you must get your evidence in order and get professional advice.
The evidence required to prove your case can be substantial & it is more than simply a few cancelled checks or even an accounting software program. Each element has different evidence requirements and must be proven with specificity & in the format required by the IRS or your case will be rejected. Plus, the IRS will likely impose “negligent record-keeping penalties” and/or “accuracy-related penalties” on you as well. (See IRS Notice 746).
We pride ourselves in being extremely prepared for these meetings. Most of the time, the client does not need to appear for the interrogation. Our goal is to provide the auditor with the information necessary to quickly resolve the audit.
This is the most comprehensive type of audit. Field auditors will stop by your home or place of business to determine if your deductions are accurately stated on your return. They will want to see any business equipment you purchased and claimed as a deduction. Oftentimes these audits require several visits and are the most difficult to resolve.
Our goal is to reduce the interruption to your business and resolve the audit quickly.
IF YOU HAVE RECEIVED AN AUDIT LETTER – GET HELP!
Any audit letters sent by the IRS or your State Tax Authority merit professional attention. If you have received an audit letter, we highly recommend you contact a tax professional immediately.