Addressing IRS Back Taxes During IRS Tax Audits

Addressing IRS Back Taxes During IRS Tax Audits

Tax audits are selected based upon prescribed criteria including random selection, a statistical test (checking potential audit exposure based upon income/deductions claimed) called a Dif test, and for those industries where the IRS has determined there are potential non-compliance issues. Though your audit is more than likely a pure random selection being sure you are ready and that all of your audit exposures are adequately addressed in advance, by an independent party/your CPA, will do much to ensure that when the audit occurs you are ready. As John Wooden was quoted "Failing to Prepare is Preparing to Fail" so being sure to retain a CPA as your Power of Attorney as soon as possible. While serving as a CPA in Metro Atlanta for thirty years, this is the single largest mistake I see taxpayers make during the performance of an IRS audit.

Knowing when a tax issue has "hit the wall" and that a kick start is needed in your representation process is one that a CPA can help determine, advise and direct. If for example, we disagree with the findings of an IRS determination, then we can appeal a case to the IRS Office of Appeals. After this is done, then we can use the Appeals Office to gain a satisfactory conclusion to all parties. To read more and to understand this process visit http://www.hiscpa.com/blog/2009/05/03/atlanta-cpa-advice-on-when-to-appeal-tax-issues-with-the-internal-revenue-service/

If you've just gone to your mailbox and much to your chagrin you have received an IRS notice. Your immediate reaction is one of fear and dread as your pulse races and you are not certain of what to do next. Although most certainly your initial reaction will be as described, there is a different path to resolving all audit issues to yours and the IRS's satisfaction and to close your audit with no additional monies due.

A successful audit process will include many factors and variables consisting of, first and foremost, calling your CPA. Your tax adviser is the absolute best one to address your audit and to better represent you and your business's issues to the IRS using both the law and knowledge of your business to your best advantage. The first step to address after a return is selected for audit, aside from calling your CPA, is to review the return in detail. Try to evaluate, from an independent perspective, your return, carefully evaluating what an IRS agent might be seeking most to review. After you have done this initial step you should then evaluate your documentation to see if you might need to accumulate any additional information to collaborate and support your return. During this process you should not discover anything new as all of these issues should have been adequately addressed before your return was prepared, signed, and forwarded to the IRS. However this process is critical to ensure that there are no holes in your paperwork, which might later cause you difficulty.

It is advantageous for the CPA alone to meet with the IRS so as to remove any emotional issues, which might otherwise surface and dampen the ability to successfully and quickly resolve the process. Frequently when taxpayers strive to handle their own audit by themselves they fail to sense and adequately address the issues the IRS request; thereby causing themselves unnecessary hardships and economic loss. A CPA, who is familiar with you, your business and tax law is far more apt to successfully close an audit with no changes. Often during the audit process, yours as well as your CPA's, expertise, will, and judgment will be challenged causing you to want to negotiate just to make the issue go way. However, this is not the best direction to choose as settling on any issue at all, when you are right, is not a prudent business decision especially in an audit environment. Of course this assumes that you can prove that your return has been truthfully prepared while using judicious and sound judgment and tax law accurately to reflect your true and just tax.

A successful audit experience depends on your ability to stay focused on the truth, the process, and to steadfastly stay on course. To learn more about IRS/Tax Representation Issues and an Offer in Compromise visit http://www.hiscpa.com/irs-representation.html

John Dillard is an Christian Speaker/Author and Certified Public Accountant. To See how he takes Christ along with him to work visit http://www.hiscpa.com/  and for his latest book Overcoming Life's 9/11's: Job's Journey visit http://www.john-dillard.com/  Dare to Attempt Something so Great for the Kingdom of God that it is doomed to failure, lest Christ be in it!