My Tax Return Is Going to Be Examined. What Is Going to Happen?

 Posted on September 24, 2018 in Tax Audits

If you have been informed that your tax returns will be examined, or audited, you may not know what to expect from the process. Often, taxpayers are upset about having to devote more time to their tax returns, and they may be worried about a larger tax liability or concerned that they will face penalties from the IRS.

All of these thoughts are well-founded. Hiring an attorney to look out for your best interests during the course of an examination is allowed under IRS rules and may help you keep your tax liability as low as possible.

How Is One Chosen for an Examination?

According to the IRS, there are two ways your tax return may be selected for an audit. The first way is by computer programs that find incorrect amounts on your returns when compared to documents like W-2s or 1099s. 

The second method is to use information from compliance projects that would indicate a tax return has reported the wrong amounts. Compliance projects use newspapers, public records, and individuals as sources to determine the correct amounts.

Where Will the Audit Take Place?

There are two types of examinations that the IRS may elect to use. First is an exam by mail. With this type of exam, you will receive a letter from the IRS requesting certain documentation pertaining to your income, expenses, and itemized deductions. It is important to know that with mail audits you can elect to have an attorney representing you, so long as you furnish written authorization. 

The other type of examination is an in-person audit. Just like with a mail audit, you will be contacted by mail and informed of what documentation you need to have available. You can attend the audit yourself, have a witness accompany you, be represented by a tax professional, or have a tax attorney go as a representative in your place. 

What Happens at the End of the Examination?

Once your exam is over, the IRS may elect to accept your tax return as filed. The IRS may also determine that you owe additional money, and you may also be required to pay penalties and interest. If you believe this determination is in error, you may be able to appeal this decision.

Call a San Jose, CA Tax Audit Attorney

If your tax return is selected for examination, you have the right to have an attorney represent you during the audit process. Our firm has helped many taxpayers, and we understand what the IRS is looking for and how best to handle an audit situation. Even when an IRS representative seems helpful and concerned, he or she is seeking information that could be used against you. This is their job. Your interests are best served with an experienced tax attorney in your corner. 

In addition, having a tax lawyer help establish a tax strategy and review your tax returns before you file them may help you avoid selection by the IRS for an audit in the first place. Contact our experienced San Jose tax audit lawyer at 408-866-1810 to schedule a consultation.

Sources:

https://www.irs.gov/pub/irs-pdf/p3498.pdf

https://www.irs.gov/pub/irs-pdf/p3498a.pdf