Few Issues that Usually Arise During a Tax Audit

After the financial crisis Majority of tax has become defaulters by not paying the taxes in time. Some of them tried to reduce their taxes by filing fake taxes and most of the taxpayers didn’t hire tax attorney and made errors in preparing taxes. The errors in calculations, missing documents, major difference in expenses and declaration excessive IRS relief or tax deductions will highlight your name in the IRS’ systems. If this happens you’re more likely to receive Notice for audit from the IRS. If you’ve received such notice don’t ignore it as some of the tax payers do it assuming their filing was 100% correct. You should respond to the IRS at the earliest. While calling IRS back, inform them that your lawyer or attorney will call them back and make a note of date and time of your call so that you can show this as a proof that you respond to the notice in time. Once you face IRS in an audit there are few common issues that arises in almost every second or third audit.

One of the most common issues that arise in the process of audit is missing documents to prove that the deductions or exemption is genuine. If you’re declaring a particular tax exemption, you should attach related document to prove that the exemption is legitimate and you’re not trying to play games with the IRS. Therefore, experts always suggest you to keep your bills and invoices in an organized manner so that you can find them without much of hard work. You should keep all your bills of dining out in a restaurant or traveling tickets. It’s better to make a file for bills and invoices and arrange them according to date. At the time tax preparation, you just need to pick the bills from the file and attach them with your tax filing. In case, you’ve lost the bills, you should get min touch with the vendor to ask for the duplicate copies, if he/she fails to provide the duplicate ones, you can attach an affidavit to prove that your expenses are genuine.

At times, IRS agent will tell you that you’ve earned an additional income however, you’re not aware of that. In this case, you’d need to go through the income which is being considered as an additional income by the IRS and find proof to confirm that it is not correct. The notice sent by the IRS will have information of the queries asked by the IRS and amount you owe. Most of the taxpayers are not aware that they can file a petition against the amount calculated by the IRS. It is quite a daunting process, but if you’ve hired a tax attorney, he/she will try to finalize the amount that you actually owe. Tax audit is very dangerous as per the impression among the tax payers that’s why they got panic by just receiving a notice. But you should keep your calm and go through your records again and check if errors were made or not.