With Tax Day delayed until July 15 due to the COVID-19 pandemic, the Internal Revenue Service’s (IRS) annual wave of audits targeting individuals and companies suspected of underreporting and underpaying their federal income tax obligations has been delayed as well. But, the time has come; and, if you are being audited, it is important that you take the necessary steps to protect yourself. Here are five tips from Washington D.C. tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group:
Tip #1: Collect Your Financial Records
Collect all of your financial records from the tax year for which you are being audited. This includes all of the records you used to prepare your federal returns as well as any records that you either (i) may have overlooked when preparing your returns, or (ii) received subsequent to submitting your returns to the IRS.
Tip #2: Understand What is at Risk
IRS audits are civil inquiries, which means that you are facing the possibility of financial penalties but federal prison time is not currently on the table. However, the civil penalties for tax fraud and tax evasion can be substantial, and the IRS can use a number of enforcement mechanisms to collect what it says you owe. For example, the IRS can garnish your wages, and it can also seize, levy or place a lien on your property. If an audit reveals evidence of intentional tax evasion, then it could potentially trigger a criminal investigation.
Tip #3: Avoid Mistakes that Could Increase Your Risk for Penalties
When facing an IRS audit, you need to avoid mistakes that could increase your risk for civil or criminal penalties. The biggest mistake that most people make is simply ignoring their audit letter. The IRS is not simply going to go away, and ignoring an audit could potentially make it more difficult to assert a successful defense.
Tip #4: Be Prepared for the Process to Take Time
The IRS’s audit will take time; and, if you need to challenge the outcome of your audit, this can be a lengthy and difficult process as well. As a result, you need to be prepared to remain actively involved, and it is strongly advised that you seek representation from a tax lawyer who has extensive experience successfully resolving IRS audits and appeals.
Tip #5: Contact a Tax Lawyer Promptly
Hiring an experienced tax lawyer is the best way to protect yourself during an IRS income tax audit. The Internal Revenue Code (IRC) and the federal tax regulations are extraordinarily complex, and you will need to rely on the advice of counsel in deciding how to respond to the IRS’s inquiry. This is true whether you are facing a correspondence audit, office audit or field audit, and it is true regardless of the specific issues involved.
Contact Thorn Law Group in Washington D.C. for More Information
Are you being audited by the IRS? If so, the attorneys at Thorn Law Group can help you avoid unnecessary consequences. To speak with Washington D.C. tax lawyer Kevin E. Thorn in confidence, call 202-349-4033, email ket@thornlawgroup.com or request an appointment online now.
