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The Audit Process of the I.R.S.

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One of the most routine yet dreaded tax experiences is having the I.R.S. examine – aka audit – a tax return. Contrary to popular belief, the I.R.S. does this simply to verify that the reported tax is correct – it does not constitute an assumption of fraud or inaccuracy on the part of the taxpayer. Nonetheless, the process is not any less time consuming or at times difficult to deal with. Here are some of the basics of what an I.R.S. audit entails, why it is implemented, and – most importantly – your rights as a U.S. taxpayer.

The I.R.S. selects returns based on a variety of methodologies, prerequisites, and factors. For example, large companies are almost always examined annually by virtue of their size. Individuals can be selected due to a mismatch between their return and that of an employer W-2 Form or bank 1099 Form. The I.R.S. also utilizes advanced technology to identify items statistically more likely to require review.

Based on these and a host of other factors, it is worth stressing again that being subjected to an audit has little to do with your honesty or law-abiding nature.

The auditing process will be conducted either by mail or through a personal interview; the latter can take place at an I.R.S. office (known as an office audit) or at your home, place of business, or accountant’s office (a field audit). The agency schedules the time, place, or method of the audit, although you may request a change. Moreover, if you give the I.R.S. an advance notice, you are allowed to make audio recordings of the interview.

During the audit, your tax records will be looked over, as selected and indicated on I.R.S. notification letter. Taxpayers are permitted to either act on their own behalf, or have someone else accompany them or represent them in their place. Note that if you opt for a representative, the I.R.S. must receive proper written authorization.

Among the most important things to remember about your audit is your right to Appeal the changes proposed by the I.R.S. examiner. This is explained at the beginning of each audit, though far too often taxpayers are too fearful or unsure about how best to proceed with this vital right. If you feel wronged by an I.R.S. audit, or want to stand up for your rights as a taxpayer, it is imperative to have an experienced and knowledgeable tax attorney by your side.

David Bauer of the Bauer Brofsky Law Firm, among the finest South Florida Law Firms in the region, has proven expertise in tax, probate, asset protection, and estate planning.  The experienced and versatile South Florida Tax Lawyer has represented numerous clients in a range of tax and financial matters. For more information, please contact us at (305) 712-7979

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