TaxHelp presents Common-Sense Answers to many Frequently Asked Questions during an IRS Audit.
The full TaxHelp Audit Program is much more detailed, exact and focused.
1. “Can the IRS take my assets?”
A: Not yet. The IRS cannot assess the tax against you and collect until they have sent you a Notice of Deficiency, (90-day Letter) allowing you 90 days to petition the Tax Court for a re-determination. But, if you fail to petition Tax Court, then, “Yes” the IRS can take your assets to pay for the tax because you defaulted and didn’t pursue your case.
2. “What if I owe the IRS?”
A: It is to your advantage to pay the IRS early, if you can. If you can't pay, the TaxHelp outline of IRS Collection tactics will answer most of your questions. Please follow the TaxHelpLaw Collections Prep Steps and contact tax attorney J. David Hopkins for guidance or representation.
3. “If I owe the IRS, how much interest will I have to pay?”
A: Interest is statutorily mandated and cannot be waived by the IRS, unless they gave you erroneous written advice or improperly delayed the proceeding. Interest is a variable amount, adjusted with the Prime rate.
4. “If I owe will I have to pay penalties?”
A: There are several types of penalties, depending on the case. In the most extreme case the IRS could impose a fraud penalty which is 75% of the tax owed. The lesser penalties are a filing delinquency penalty which is 5% a month up to 25% of the amount owed, and a Late Payment penalty, which is .5% a month, up to 25% of the amount due. If you owe nothing then the penalty is zero. There is a statutorily imposed minimum penalty of $100, but this is rarely imposed by the IRS. However, there is a procedure called a "Penalty Abatement", which will lower or eliminate delinquency penalties.
5. “Will I go to jail?”
A: Certainly failure to pay taxes is a crime but the vast majority of IRS collection cases are treated as civil matters and no jail is sought. They just want the money. If the IRS or FBI is pursuing you for criminal tax charges, please contact J. David Hopkins of TaxHelpLaw!
6. “Why doesn’t the IRS have to prove anything against me?”
A: Because no system of taxation would work if the government always had to defend itself against lawsuits from everyone. But, to make a determination that you owe the IRS must have some facts to justify their position. So, it’s up to you to give them the facts to make the determination in your favor. There are certain limited situations where the IRS bears the burden to prove the case against you, such as when they allege fraud or when they failed to review the evidence you gave them. But, these situations are rare. You must prove your case.
7. “Why was I chosen for an Audit?”
A: Probably because there is some item on your return that the IRS thinks is unusual. The IRS does do random audits but the IRS usually requests information because of something strange on the return. Common Audit Triggers: Losses claimed on the return, high personal deductions, mismatch of return items with IRS records.
8. “When can the IRS Audit me?”
A: Anytime within three years of the time they got your return and posted it on their system. If they allege that there is a “grossly erroneous” item on your return they have six years. They can audit any time they allege fraud and you should get an attorney to handle the case.
9. “How long should I keep documents?”
A: All documents should be kept at least during your life. Subsequent law changes often make past events relevant and sometimes old documents need to be used for purposes other than tax.
10. “Will I be subject to future audits because I challenged the IRS?”
A: Usually, no. But, the outcome of the audit might trigger certain treatment of year-to-year items. Be careful when agreeing to anything.
11. “If the IRS sends me a letter can they come to my house or business?”
A: Yes, but it’s rare. If they do, just step outside, get the agent’s ID card and tell him or her that you’ll contact them later. They may be insistent to interview you at that moment but resist an unprepared interview. Tell the agent that your are contacting a representative and need some time. Since you are entitled to representation, they must allow you time to consult with one. Call J. David Hopkins, Tax Attorney at TaxHelpLaw if this happens to you.
12. “What if I don’t have all the evidence?”
A: It often is helpful to go to the bank or credit card company and get all of your checks, receipts and statements. You can also go to suppliers and vendors and get their records. Sometime various governmental entities have evidence of items. And if all else fails you can have third parties sign affidavits about various aspects of the case. Your testimony is valuable but it’s better if it is backed up by some other source to verify your story. The TaxHelpAudit Program show you what to do and say in these situations!
13. “What if I need more time to respond to the IRS?”
A: Usually the agents will give you extra time, within limits. But, they have time limits for conducting audits and they will insist on a response if you are not timely. Generally, the IRS does not like to wait more than a month for you to prepare your case. TaxHelpAudit is for Emergencies!
14. “What happens if I lost my tax return?”
A: The IRS agent will have the returns for the years at issue but you can also order a copy of your tax return by using Form 4506 obtainable at www.irs.gov. You may also get a transcript of the return by calling 1-800-829-1040. You will not receive the actual return but a transcript of each line.
15. “What happens if I lost my evidence or some part of it?”
A: Many records can be obtained from the places where they originated, such as banks and financial institutions, hospital and medical records, employer records or insurance records. School and government records can also be sources of information. If a part of your evidence is missing but the remainder seems to verify your story, the IRS agent might be persuaded. If you have no evidence at all argue that you should be allowed some deductions based on the usual expenses which are incurred in that type of business and that industry.
16. Why should I buy the TaxHelpAudit program?"
A: Because someone must get your records in order and gather the correct documents in the proper manner or the IRS will either reject your claims or perpetually be sending you off for more information. The cost of hiring an accountant or bookkeeper is enormous. See Cost Comparison. The TaxHelpAudit program shows you with text, audio and video exactly what documents and evidence to gather for every possible line of your return and how to put it all together so your audit is smooth. You won't have to worry about doing or saying the wrong thing!!