The U.S. Internal Revenue Service, or IRS, is an agency of the U.S. federal government that collects taxes and enforces tax laws. If you receive a notice of an impending IRS audit, you must take the matter seriously. The IRS is a powerful agency that has the ability to impose penalties ranging from civil fees to imprisonment for criminal tax evasion, depending on the severity of the non-compliance. This section will discuss what an IRS audit is and what to do if you receive notice of an upcoming audit.
What is an IRS Audit?
An IRS audit is a review of an individual’s or business’s tax return to ensure that all income has been reported and all taxes have been paid. The IRS may contact you about an audit if you report unusual income, claim deductions that are questionable, or have errors on your tax return.
Taxpayers who under-report their income, claim large deductions, fail to file their taxes on time, and business owners are more likely to be audited. The auditor will require the individual or business to substantiate documentation to prove that the information claimed on the tax return is correct and that all required tax payments have been made.
Hire a CPA Immediately
If you receive an IRS audit notice, do not respond on your own. Do not communicate with the IRS directly. Immediately contact a CPA to communicate with the IRS on your behalf. If you respond to the IRS yourself, you may inadvertently admit something, give information that is contradictory, or get caught in a lie. This can result in substantial financial penalties and legal consequences.
A CPA will also ensure that the matter is addressed promptly. Many taxpayers who receive a notification of an IRS audit simply ignore it. This results in missing critical deadlines, which allows the IRS to invalidate deductions and substantially increase taxes and penalties. Hiring a CPA will prevent you from saying the wrong things to the IRS and will ensure that the situation is addressed in a timely manner, saving you money and keeping you out of legal trouble.
Have you received an IRS audit notice? Don’t wait! Contact Larry Bradford, CPA, today. Larry Bradford has over 35 years of experience as a Certified Public Accountant and will use his expertise to help you properly handle your upcoming audit. Call 512-402-0049 or send an email to firstname.lastname@example.org to set up an appointment.