Hyden, Miron & Foster, PLLC Law Blog

Friday, October 5, 2018

Five Things You Didn't Know About IRS Audits

If you receive notice of an audit by the Internal Revenue Service (IRS), stay calm, but do not ignore the notice. An audit notice does not necessarily mean that you have done anything wrong. But, you should also make sure that you understand your legal rights and responsibilities by speaking with an Arkansas tax law attorney as soon as possible.

Five Important Things You Should Know If You Are Facing an IRS Audit

There are many things that you should know if you are dealing with an IRS audit. Our Arkansas tax lawyers have come up with the top five things every person should know when dealing with an IRS audit:

1.  IRS Audits Are Not Random Luck Of The Draw

The IRS has a complex procedure for choosing tax returns to audit. In many cases, something about the tax return stands out when the return is being reviewed, or the return contains several “flags” that route the return for further review. However, being flagged for an audit does not mean you have done something wrong. You need to consult with our Arkansas tax lawyers to discuss the best way to approach the IRS audit based on the facts in your case.

2.  Penalties Vary Between Violations

If an audit reveals that you owe additional taxes, you may also face interest and penalties. The penalties can vary significantly depending on the type of error you made on your tax returns. A minor error may have a small fine; however, if fraud is involved, the fines may be very high. In some cases, criminal charges could be filed, and prison sentences may result. If you believe an audit may involve charges of fraudulent behavior, call our Arkansas tax lawyers now to learn about your legal rights and the steps to take to protect yourself during an IRS audit.

3.  You Can Appeal a Decision in an IRS Audit

The decision made by the auditor is not final. If you disagree with the results of an audit, you have the right to appeal the decision. However, you must file your appeal according to specific IRS instructions. You must also file the appeal before the deadline or lose your right to appeal. If you chose to represent yourself during the audit, you should contact our Arkansas tax lawyers now to discuss the appeal.

4.  Using a Tax Preparer Does Not Excuse Your Tax Debt

Many people believe that using a tax preparer protects them if mistakes are made. However, tax preparers make mistakes. As the taxpayer, you are responsible for the information on the tax return. If the mistake results in additional tax debt, you owe that money to the IRS. However, if it would be virtually impossible for you to know about the mistake made by the tax preparer before, you may want to attempt to negotiate a waiver of the interest and/or penalties. Depending on the circumstances, you may also have a claim against the tax preparer.

5.  Consult With an Attorney Before Signing a Notice of Examination Change

IRS Form 4549 explains the changes to your tax return that the auditor states are necessary pursuant to the findings of the audit.  You are asked to sign this form stating that you agree to the proposed changes and the amount of taxes you owe because of the changes. You should never ignore this form or fail to respond to this form.  However, you should consult with our Arkansas tax lawyers before signing this form. You may have several options for responding to the auditor's findings, including filing a formal response to the proposed adjustments or filing an appeal.

Don’t Face an IRS Audit Alone

If you have received notice of an IRS audit, call our Arkansas tax lawyers for more information. Dealing with the IRS can be intimidating. We can answer questions and provide guidance if you need assistance. You need an experienced legal advocate to protect your rights during an IRS audit. Contact the Arkansas tax lawyers at Hyden, Miron & Foster, PLLC today.

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