What Is The Role Of An IRS Audit Attorney?
Table of Contents
- What Is An IRS Audit Attorney?
- What Triggers An IRS Audit?
- How Often Does The IRS Audit Someone?
- FAQs: Frequently Asked Questions
Paying your taxes is a hassle, and an IRS audit attorney can help you through the tax process. When you own something, earn a handsome amount through a property, have invested somewhere, or earn fair profits; you are eligible to pay taxes. Apart from the conditions mentioned above, any individual working and earning has to pay taxes to the government.
However, what frightens people the most is a notification from the IRS. Many people panic during such situations and tend to make blunders. You have to be vigilant and responsive to ensure that things turn out in your favor. If situations don’t fall in your favor, you might pay extra penalties.
Hiring a lawyer or an IRS audit attorney will solve all your tax problems. Many people directly linked to paying taxes know how an IRS audit attorney helps. However, those unfamiliar with what an IRS audit attorney is, read on to explore.
This article will explain what an IRS audit attorney is, what triggers an IRS audit, how often does the IRS audit someone, how does the IRS notify you of an audit, and what does an IRS audit letter look like?
What Is An IRS Audit Attorney?
Paying taxes and dealing with taxes is not a piece of cake. Ideally, the majority of people hire a lawyer who helps them clear their taxes and acts as an interface between the taxpayer and the taxation authorities.
Hiring an IRS audit attorney helps the taxpayer in many ways. A tax attorney provides advice to the patient regarding the taxes and the taxpayer’s rights. In addition to this, like many lawyers, the IRS will not exploit clients who don’t know. Instead, an IRS audit attorney will help them resolve their issues.
An IRS audit attorney helps develop strategies specific to clients and their financial situation. For instance, the strategy developed for a business person will be different from that of an individual who earns monthly.
What Triggers An IRS Audit?
What triggers an IRS audit? Well, certain things will trigger the need for an audit. Hence, you have to be careful when dealing with tax audits. The following are some of the things which might trigger the need for an IRS audit.
Unreported foreign income is one of the significant red flags that will eventually trigger an audit. This is because it is the safest way for wealthy people to hide their income. Hence, the authorities pay close attention to all the foreign income and ask the taxpayers to use appropriate forms to report this income or any other assets.
High income is one of the significant red flags that will trigger an IRS audit. Hence, the more significant income you report in an audit, the greater the chance of an IRS audit.
During the evaluation process, the IRS also asks for 1099s and W2s. This way, it calculates your figures and any amount that’s missing or is not mentioned. If it finds something that the taxpayers do not report or observes anything shady, then there are high chances of you getting questioned by the authorities.
Cryptocurrency is regarded as a “dirty dozen” by the IRS. IRS audits usually charge people dealing with cryptocurrency. In 2019, taxpayers were asked to mention if they were engaged in any cryptocurrency dealing on their forms.
How Often Does The IRS Audit Someone?
How often does the IRS audit someone? It is a difficult question to answer and is usually restricted to certain situations. Anything that triggers an IRS audit, directly or indirectly, will result in the IRS auditing them. If an audit finds any red flags or your profile has something that triggers an audit, the IRS will indeed conduct an audit.
Usually, the IRS has two ways to manage an audit. They either use the mail method or the in-person interview method. The mail will be sent directly to your official email while the interview will be held at the IRS office, at your place, at a business place, or at an accountant’s office.
All the doubts will be cleared during the in-person interview. However, if the audit is managed through email, the audit letter might request you to submit additional proof or additional information about your expenses or income.
Sometimes, the taxpayer is uncomfortable with the audit managed by email or submitting proof through email. You can submit a request to have a face-to-face or in-person audit in such a case.
How Does The IRS Notify You Of An Audit?
Each year, millions of Americans are examined for taxes. But many wonder “how does the IRS notify you of an audit?”
The IRS informs the individuals if they are selected for an audit through the mail. They have abolished the use of the telephone to notify or initiate an audit through the telephone.
As mentioned above, a sudden or spontaneous email from the IRS might scare you. But having a keen knowledge of how the audit process works might save you from penalties.
Moreover, hiring a good lawyer or IRS audit attorney is one of the best and safest ways to present your case and defend yourself.
What Does An IRS Audit Letter Look Like?
The IRS audit letter is issued through the mail. The IRS audit letter has some key elements. These elements include the information mentioned in the IRS audit letter.
A typical IRS audit letter will include your name, address, and social security number. It might also include other information such as the taxpayer ID, form number, employment ID card number, and contact information such as your phone number and email address.
If you were wondering “what does an IRS audit letter look like?”, the following are some of the sections of the IRS audit letter.
What Is The Information Request Area In The Audit Letter?
This area emphasizes the purpose behind requesting documents. Irs usually requests proof in the form of documents. Hence, this section of the letter will explain why the taxpayer requires those documents.
What To Expect?
This will be the most critical section for the taxpayer. This section will emphasize how long your audit meeting is likely to last. Moreover, they will also explain their demand when they wish to complete the entire process. This section will also explain if you were selected for a non-correspondence audit or not.
Who Can Come To The Meeting?
This section will highlight who might accompany you to the meeting. You can accompany your spouse if you have filed for a joint audit or your lawyer. However, if you are attending alone and there is no one to represent, a form called a “power of attorney” must be filled out and submitted.
What Are Miscellaneous Letters?
A certified public accountant sends an attorney letter to the taxpayer’s attorney. This is a formal business letter that validates the information sent by the company’s management. The attorney’s letter has a primary motive. It informs the auditor about any legal action that the auditor is likely to take against the client. This letter states that any such action can have a drastic financial impact.
FAQs: Frequently Asked Questions
Often, people are confused about how to respond to audit letters and what to do if they fail to respond or take longer to respond. The following are some of the frequently asked questions by taxpayers and their appropriate answers.
What Do I Need To Provide?
Ideally, a list of documents will be mentioned in an email by the IRS. The IRS will initiate a written request for specific documents they need. You can provide electronic documents generated through tax software as long as they are accepted by it. Furthermore, you should keep a careful record of all the documents you used to file your taxes.
Did The IRS Receive My Response?
Many people inquire how they will know if the IRS has received their response. Well, you always have to direct the delivery service you choose to inform you or send a confirmation message or mail that it has received your response. Usually, you will have to pay the added amount, but it is better to be sure.
How Long Does An Audit Take?
As mentioned above, the length of the audit process usually varies. Hence, the audit can be prolonged due to complex issues such as unavailability of information, unavailability of both parties, and any other disagreement between both parties.
What Are My Rights?
Multiple rights of the taxpayer exist, such as courteous treatment by the IRS; privacy and confidentiality about taxes; knowing the reason behind seeking information by the taxpayer; and the right of representation.
An IRS attorney holds a significant role when they withhold you. Failure to hire a lawyer or an attorney can be problematic for you. Failure to hire a lawyer or attorney can lead to extra penalties due to inappropriate defense.
Hence, ensure that you hire an IRS audit attorney to secure your defense or, in the first place, prevent being withheld by the audit by avoiding the trigger points mentioned in this article.