Austin Tax Defense Law Blog

While many Internal Revenue Service tax audits are conducted randomly, there are certain factors that might trigger audits. When the information on one document does not match the information on the other, such as the income reported does not correspond with the income on a W-2, the chances of getting audited are high. Similarly, if someone's automatic deductions are more than for others in that profession, they are assigned a high Discriminant Inventory Function System Score, and the higher the score, the more likely the audit. Lastly, the more someone earns, the more likely they are to get audited.

There are also some steps Austin residents can take in an attempt to reduce the chances of getting audited. One of the most important tips is to double-check one's math. Correct numbers on the wrong line or incorrect addition can trigger an audit that could have been avoided if reviewed.

Before you owned your own business, tax season came with its complications. Now, with a new company, your taxes likely became even more difficult. There are many pieces to the puzzle, and it can be hard to know if everything is correct when you send it into the IRS.

While some audits are triggered because of an error, there is also the chance that your business will face a random audit. In either case, the idea of facing that first audit can be terrifying. You may be especially nervous if you have never faced any type of audit.

An Internal Revenue Service audit is something most, if not all, Texas residents dread, which is why worrying about it is only natural. People hold on to receipts and other paperwork for ages in fear of one, but how long should a person worry about an audit and hold on to documentation?

Generally, the IRS has around three years after a filing to audit the filer. However, it is important to know that there are certain exceptions to the basic rule that can increase the time limit to six years or more. First, if more than 25 percent of the filer's income has been omitted, then the time limit to audit someone increases to six years. "Omit" is more broad than simply leaving off or neglecting to report income. According to the IRS, it also means reporting that has the same effect as omission.

Texas residents may be concerned about getting selected for an audit by the Internal Revenue Service. However, having knowledge about what the process can entail and what a person's rights are in the process can go a long way toward addressing many concerns. First of all, its important to know that an audit does not always mean that there is a problem. It is possible someone is selected for an audit based on a statistical formula. Tax returns are compared against similar tax returns with the help of a computer program. Tax returns can also be selected for an audit if they involve issues with other taxpayers whose audits were selected for audit.

The IRS will provide the selected individuals with a written request for the specific documents that will be needed as proof to support the income, credits or deductions being claimed. All of these documents would have already been used to create the tax returns; they are not new ones. The request will also state how the documents should be presented, and when doing so it is important to ensure they are organized according to year, in order to prevent errors or misunderstandings.