Tax Audit Representation

It may be every taxpayer’s worst nightmare: the dreaded tax audit. Being audited is serious and can have dire consequences if the outcome of the audit doesn’t go in your favor.

An audit can result in a taxpayer owing hundreds or even thousands of dollars, serving as an upsetting surprise to individuals who thought their tax obligation was fulfilled. In extreme cases, an IRS audit can result in criminal penalties and even jail time. Even in situations where the taxpayer’s audit is random (and therefore not based on wrongdoing or error), the tax audit process is complicated, time-consuming, and stressful.

At Key Tax Group, we understand the complexity, confusion, and consternation involved in a tax audit. That’s why we offer full-service tax audit representation to help you before, during, and after an audit. We specialize in tax audit representation and can represent you before the taxing authorities question you regarding your tax return or at any point during your audit.

When faced with an audit, it’s important to be informed about the process, be proactive, and ensure that you have an experienced, no-nonsense tax audit representative by your side protecting your rights and ensuring that your audit is accurate and fair.

Why Am I Being Audited?

When you begin the audit process, it’s important to understand that being audited doesn’t always mean that you did something wrong; far from owing additional fees and penalties, some audits even result in the taxpayer receiving a tax refund.

In some situations, a taxpayer may be audited to verify the accuracy of the information on their return, as part of a routine procedure to ensure compliance, or the audit may be initiated by a random computer-generated selection.

Oftentimes, however, a taxpayer is audited because of some inconsistency, error, or fraudulent action (intentional or otherwise) that is reflected on their tax return.

Whatever the reason behind your audit and regardless of whether you are being audited as an individual or a business, you’ll need to be prepared to answer questions and provide extensive documentation to support the accuracy of the information included in your return. Examples of documents that you may be required to produce include:

• Expense records and other documents that reflect expense-related activities, such as calendars, logs, or appointment books
• Financial records, including bank statements, canceled checks, receipts, or handwritten cash remittance slips
• Paper and electronic credit card statements
• Proof of paid invoices from individuals or businesses
• Proof of purchase and maintenance of equipment for business use, including cell phones, computers, printers, copiers, vehicles, and other assets
• Vehicle records and related expenses data
• Records of business rental expenses, including leases and rental insurance policy
• Entertainment and travel receipts
• Loan agreements
• Medical records and related expenses
• Documents proving loss or theft of assets, such as insurance reports, adjustor’s appraisal, or other proof
• Proof of charitable contributions
• Legal records that impact your finances, such as a divorce decree or land purchase
• Schedule K-1 reports of shareholders’ share of income, losses, credits, and deductions
• Any other records, including those in electronic form, that may support or contradict your tax return

If you are being audited, the situation can go from bad to worse quickly unless you contact an experienced tax attorney immediately. Usually, a small business will be required to produce the above-referenced records for the three previous tax years; however, the auditor will be looking for information that could lead to opening up other tax years to an audit (up to six years), wasting even more of your time and money.

What To Expect During An Audit

The IRS conducts several types of tax audits:

• Correspondence audits, which are carried out via letter
• Office audits, which take place in an IRS office
• Field audits, which may be done at your home or place of business

Once your audit begins, the auditor assigned to your case will review the information you supplied in your tax return and the supporting documentation that you have provided. While it may feel like the auditor is going through your records with a fine-toothed comb eager to penalize the smallest error, in reality, they are tasked with identifying individuals or businesses whose records reflect one or more of the following red flags:

• Disproportionate deposits in comparison to reported income
• Concealed assets, such as non-disclosed property, brokerage accounts, or bank accounts
• Excessive personal expenditures
• Business profits that were deposited into personal accounts instead of business accounts
• A questionable excess of deductions

When the audit is complete, the taxpayer will receive one of the following three outcomes:

• Agreed: Your return will be updated resulting in additional money due, including taxes, penalties, or interest. By agreeing, you accept the changes and agree to pay the new tax amount due.
• No change: The auditor concludes that the information you provided on your tax information was accurate and no further action or payment is needed.
• Disagreed: The auditor determines that your tax return needs to be updated and additional money is due, but you dispute that finding.

What To Do If You Disagree With The Outcome of Your Federal or State Tax Audit

If you disagree with the outcome of your audit, don’t panic: As long as you act in a timely manner, you have options available to dispute the findings. Remember that the Taxpayer Bill of Rights mentioned above gives you the right to seek review through formal or informal proceedings of any adverse decision. It also guarantees your right to consult with an experienced tax representative, such as the team of experienced tax representatives at Key Tax Group.

Don’t face your audit alone. Without experienced representation, you could end up owing large amounts of money to the IRS. Audits are complicated and require special knowledge to navigate successfully: most clients are unsure what to disclose, how to disclose, and how to present the supporting documentation in a way that will prevent them from being railroaded by an aggressive auditor questioning them about their purchases and lifestyle.

Full-Service Audit Representation

Unlike other companies, we don’t shy away from tax audit representation. Instead, we take the lead in your audit by reviewing your returns and pinpointing potential issues, then use that information to identify additional documentation, provide supporting arguments, and minimize the impact of any amount assessed against you. And our help doesn’t stop there: In the event that you are assessed a penalty, our tax professionals can help determine a resolution based on your financial situation.

Tax Audit Help With Key Tax Group

Don’t be defeated by an audit: With the tax professionals at Key Tax Group by your side, you can conquer your audit without wasting time and money trying to navigate complex tax code on your own. For more information on how Key Tax Group can protect your interests, contact our office today for your free initial consultation.

Frequently Asked Questions