The Internal Revenue Service (IRS) is a famously effective federal agency that plays a part in the lives of virtually everyone across the country.

It processes almost 240 million tax returns each year, and any taxpayer could become subject to an IRS audit, with hundreds of thousands taking place every tax year.

Many tax audits take place at random, and there is no immediate need to panic, especially if your returns and records are all up to date. However, the IRS is far too efficient to rely solely on random chance, and numerous IRS audit triggers may lead to targeted investigations.

Even in cases where you believe that your returns are accurate, it can pay to have a tax attorney on hand to guide you through the process. After all, a tax return can be complex and even small errors can lead to unwanted outcomes.

If an audit process shows up anything worth penalizing, it can result in costly fines and, in some cases, even prosecution following a civil or criminal investigation.

Whether you’re an individual and the Internal Revenue Service wishes to audit your personal income tax return, or you’re a company owner seeking tax audit defense on behalf of your business, help is only a phone call away.

Ronald Arthur Stearns Sr. PLLC – Your Tax Law Firm

If you find yourself subject to an IRS audit, Ronald Arthur Stearns Sr. PLLC will ensure you have a team of tax attorneys on hand to navigate the case. The sooner you contact us, the quicker you will have legal representation, enabling us to get to work on your tax records and assess the case in detail.

Don’t leave it to chance. An innocent income tax audit can quickly spiral, leading to tax penalties and other costs. As noted, the most extreme cases can even result in criminal prosecution.

Our law firm comprises experienced tax attorneys with a full focus on litigation and tax resolution. The attorney-client relationship is a two-way process and we can ensure a clear understanding of relevant tax laws, deal directly with your IRS auditor and ensure peace of mind in a potentially stressful situation.

If you’ve received an IRS audit letter, contact our office today at 210-853-2135.

Why You Might Be Subject to an IRS Tax Audit

As noted, many IRS audits take place completely at random. Even a government agency the size of the IRS doesn’t have the resources to carry out a tax audit on the tens of millions of tax returns received each year.

However, the agency is always on the lookout for probable cause. If you are wondering why you have been selected for a tax audit, it may be random, or it may be due to one of these factors:

Under-reported Income

The Internal Revenue Service extends a degree of trust to those filing tax returns, and will often take figures at face value. However, they do have automated checks in place to ensure that the income stated on a tax return aligns with real-world earnings.

The IRS has access to your W-2 and 1099 forms and cross-references them automatically with your return. It’s vital to include all income on the return when you file taxes, as any omissions could quickly become considered tax evasion.

Consider whether any of these might apply to your tax return:

  • Interrupted W-2 income, which can be caused by changing tax codes or moving jobs during the tax year
  • Missing 1099 income, which can often arise from side gigs and other additional work beyond your primary role
  • Ignoring income generated as interest through savings and investments
  • In particularly modern cases, some individuals may neglect to report capital gains on their stock portfolio or cryptocurrency holdings, alongside the more traditional property sales

Business Losses or Large Deductions

Losses happen in the business world, and many companies can benefit from deductions. However, if something doesn’t seem quite right, the return may be subject to IRS audits. This could involve something as simple as putting travel expenses on your tax bill. If your deductions are markedly higher than those of others in the same industry, it may attract further attention.

Similarly, if your business losses involve multiple tax years, the IRS may want to take a closer look at the tax owed to establish whether the business is legitimate and how it maintains operations without making a profit.

Claiming Tax Relief for Which You’re Ineligible

Tax relief does not only apply to businesses. Individuals can also benefit from schemes such as the Earned Income Tax Credit (EITC) and the American Opportunity Tax Credit (AOTC). It is also possible to deduct charity donations from tax returns.

However, it is vital to ensure that everything claimed in this way is accurate. Claiming a benefit you do not qualify for is considered tax fraud.

Something Doesn’t Add Up

This can be taken literally. As anyone who deals with tax returns knows, there are a lot of numbers to get right on a typical tax return. Even tax professionals spend as much time checking figures as inputting them.

Many people turn to tax advice as something as simple as two figures not adding up correctly can be enough to trigger an IRS tax audit.

Do note, however, that simpler errors rarely lead to a full IRS audit or the issuance of an audit notice. In seemingly innocent cases, the agency will simply notify the tax preparer of the error and suggest ways to put things right.

Misreported Foreign Income

Foreign assets and income can greatly complicate any tax return. Anyone that holds assets or does business abroad should strongly consider working with a tax attorney, as tax law on foreign holdings can be a minefield.

US nationals may have a tax liability even when working abroad. For example, the IRS and Internal Revenue Code (IRC) requires anyone with foreign bank accounts with assets worth over $50,000 to report those assets using Form 8938.

The requirement for a competent tax lawyer stems from the fact that foreign assets and income can work both ways. Even those that are entirely clear on their federal tax responsibilities abroad could be viewed as being able to keep assets in places an IRS tax attorney cannot reach.

That too could potentially trigger tax audits, so anyone planning an IRS audit defense may require a tax lawyer to protect them from both sides!

You Have Received an Audit Notice – What Now?

Upon notification of a tax audit, the first step is not to panic. If you have full confidence in your tax return, a tax audit will merely involve supplying further supporting information. If you have used a Certified Public Accountant (CPA) for your filing, then you may have nothing to worry about.

Indeed, they may be able to assist you in sourcing the required information, cutting off any chance of needing an audit defense with a couple of calls and letters. Most Certified Public Accountants deal with numerous audit requests each year and build their experience into their tax planning efforts.

Correspondence Audits

Correspondence audits are the easiest to deal with and encompass the requests for further information outlined above. They can form part of a random IRS audit, or may arise in minor cases where the agency requires clarification on your tax records.

In most cases, you won’t even require the services of a tax professional unless you already have one, as the entire process takes place via email.

Office Audits

In more serious cases, an IRS tax audit may take the form of an office audit. These audits require individuals to visit their local IRS office. There, the IRS agent will inspect hard copies of paperwork and other records in search of tax fraud or other inconsistencies.

The audit examiner is often looking for evidence to support a theory, especially in the case of targeted audits.

Fortunately, individuals can request that their tax attorney accompany them to the office. This can be highly beneficial, as tax audit attorneys can assist in eliminating errors and ensuring that the agent or IRS tax attorney, where present, adheres to tax law.

Field Audits

Field audits are the most serious form of IRS tax audit and it is highly advisable to have an experienced tax attorney present should this form of IRS audit take place.

The IRS audit process, in this case, sees agents visiting a home or business. Upon notification, it’s possible to make requests for changes to the procedure. For example, an individual or business owner can ask that the audit takes place at the office of their tax attorneys.

It is also possible to request an office audit, as outlined above. However, this should only be done in certain cases, and after consulting audit defense attorneys, as it can often signal to the IRS audit agent that there is something to hide.

No matter the type of audit, in all but the most simplistic cases, it’s recommended to speak to a tax audit lawyer first, as they can provide insight into the pros and cons of any decisions taken.

Potential Results of an IRS Tax Audit

Tax audit attorneys will provide specific advice on what to expect from any given tax audit. No two cases are the same, although IRS audits typically follow similar patterns depending on the nature of the investigation.

In cases where you feel you might be at fault, it is essential to acquire the services of a tax attorney at the earliest possible convenience. Again, this is due to the unique nature of each case, and the fact that there is no such thing as a textbook tax audit defense.

The more time you can give your tax attorney to consider an IRS audit, the better they can assess your tax liability, tax debt, and any back taxes involved. Unsurprisingly, the more information tax lawyers have about the specific case, the better their opportunity to come up with a strong audit defense.

While IRS audit cases all differ, they often come to relatively similar conclusions. The most common outcomes, including IRS penalties, are:

A Settlement or Payment Plan

When a taxpayer is found not to be at fault but has underpaid their tax liability, their tax audit lawyer will often arrange a way to make up the difference in an affordable way.

Civil Liability

Federal tax agents are under no obligation to negotiate during tax audits, and the outcome may simply mean paying your tax liability in full. If this isn’t possible, your attorney may be able to appeal this result.

An Offer In Compromise

If the IRS conducts tax audits and finds that an individual or business owes tax that they will struggle to repay, even with an agreement, your tax law attorney may be able to negotiate a smaller settlement.

The IRS is not known for compromise in its audit process, but will often consider arguments from those who practice law, which can result in a greatly reduced tax bill overall.

Tax Court Scenarios

Depending on the nature of IRS audits, it may not be possible to get off quite as lightly as in the outcomes above. Federal tax planning is taken extremely seriously, and in cases where the IRS believes there has been a genuine case of tax fraud or tax evasion, they may open civil or criminal proceedings.

It goes without saying that a tax attorney is all but essential in these cases, as they are just as significant as any other court case.

The Ronald Arthur Stearns Sr. PLLC team is vastly experienced in the courtroom and will provide trusted support, governed by attorney-client privilege, to ensure the best possible outcome.

No Further Action

From the most serious outcome, we arrive at the most palatable. Remember, an IRS audit does not necessarily mean any suspicion of wrongdoing. Sometimes, it’s entirely the luck of the draw. Some cases are simpler than others, but experienced attorneys can work with the IRS to have audits dismissed entirely, with no further action or payment required.

Contact a Tax Attorney at Ronald Arthur Stearns Sr. PLLC Today

Federal tax is a serious matter, and even in cases where you believe that there is nothing wrong with your return, legal advice can prove invaluable.

Our law office boasts over 26 years of experience dealing with tax matters. We combine expertise and legal knowledge with a deep understanding of the pressure and stress that may come with an audit. We value attorney-client relationships extremely highly and always work in your best interests, whether you’ve been contacted by the IRS or State Taxing Authorities.

The IRS is very good at what it does and works tirelessly to ensure that people pay what is owed to keep the country running. However, we focus on fairness and believe that everyone deserves representation with similar knowledge of the tax system to that possessed by the IRS.

From simple mistakes to the most challenging cases, we will work with you every step of the way to ensure the best possible outcome during an IRS tax audit. Whether that means settling a case in a way that works for our clients or seeing it through to civil or even criminal courts, we provide a service that those we work with can always rely on.

No matter your current circumstances or financial history, our team is standing by to handle your case in a fair, effective manner. Remember, an audit notification won’t just go away, and the IRS can be highly tenacious, even over a couple of figures that do not necessarily add up.

There’s no need to resist an audit when you have our audit defense attorneys at hand to make life easier. Whether you understand taxation inside and out, or money matters are a chore, we’ll take it off your hands in the pursuit of an outcome that’s fair and works for everyone involved.

Contact Ronald Arthur Stearns Sr. PLLC now at 210-853-2135 to find out more about your options and to get to work on the best possible defense.