Changes Brought by the BBA’s New Partnership Audit Regime

In November of 2015, the Bipartisan Budget Act (BBA) was signed into federal law, bringing significant changes to the rules surrounding partnership audits and adjustments. The BBA replaced partnership audit laws that were in place underneath the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA). One significant change that came as a result included administering tax effects resulting from a partnership audit on a partnership level instead of individual level. Furthermore, under the new rules, tax deficiencies were to be assessed in the adjustment year (when the audit is resolved) instead of the reviewed year which the tax deficiency occurred.  The third major change was requiring partnerships to select a “Partnership Representative” who possesses all authority on behalf of the partnership during a partnership tax audit. These changes all went into effect as of January 1^st, 2018.

California’s Response: SB274

When federal tax laws are changed, they typically also impact state tax laws, and this certainly has been the case with the new BBA partnership audit laws. On September 23^rd of this year, California’s Governor, Jerry Brown, approved Senate Bill No. 274 (SB274), which requires partnerships to report every change and alternation that came as a result of an IRS partnership audit to the Franchise Tax Board within 6 months of the final determination. As an urgency statute, this bill was declared to take immediate effect. California already required individual taxpayers to notify the Franchise Tax Board if an audit resulted in an adjustment to their federal tax return.

California joins Arizona, Georgia, and Hawaii, which had each already passed legislation that addressed partnerships audits at the state level in response to changes at the federal level. Experts believe that as the new BBA partnership rules take effect for the 2018 tax year and beyond, more states are likely to make legislative changes which are in line with the federal rules.

Dealing with a Partnership Audit Under the New Laws

These new partnership audit rules, both at the federal and state level, have certainly caused a fair share of confusion among those who file partnership returns. Partnership audits are already tricky and difficult to navigate, and while these changes were designed to make the process simpler, no one knows yet exactly how they will play out in reality.

At IRS Audit Group, our team specializes in achieving the best possible results, no matter the scope of the problem. Whether it’s a federal partnership audit or a state partnership audit, we can ensure that our tax attorneys will get the job done right. We’ll guide you through each step of the way, resolving your tax issues efficiently and effectively. Facing the IRS on your own can be intimidating and extremely stressful; instead, let our experienced attorneys represent you throughout the entire IRS audit process. Call us today at 1-888-300-6670 for a free consultation where we will answer your questions and tell you how we can help you resolve all of your tax issues.

What is BBA?

Overview

The Bipartisan Budget Act is a new rule, created in 2015 and made effective as of January 1, 2018, stands to treat partners filing taxes which are due as partnerships. This means that any audited partners will be audited solely as a partnership. This rule, overall, makes it easier for the IRS to audit partnerships and can sometimes make it a bit more confusing to file taxes as partnership than before.

How it Affects the IRS Audit Process

These new partnership audit rules stand to make the IRS audit process run smoother by treating any audited partners as a complete partnership. However, though it may seem like a simple solution, these centralized partnership audit rules can tend to make things more convoluted than before. This is why some states are already coming up with laws in response to this new act, California being one of them.

What Does SB274 Change?

Overall Changes

Since BBA has made it apparently easier to audit partnerships, SB274 aims to assist with protecting partnerships by having them urgently file any tax changes due to audits within six months of the final determination. This change is all come of the new partnership audit rules recently put into effect by the federal government as of 2018.

How it Affects the IRS Audit Process

In theory, by having partnerships file changes due to audits, it should make the IRS tax audit process run in a way which is less confusing and laboring for the individual. No matter what, though, the new BBA partnership audit rules is something to adapt to, and we at the IRS Audit Group can assist with proper audit representation at times of tax distress.

An IRS tax audit is something that absolutely no one wants to deal with. Not only can audits be stressful and time-consuming, but in addition, you may have to pay additional taxes and potentially even face penalties. In this article, we’ll cover the IRS audit process, giving you all the information you need to know. Why does the IRS audit people? How does the IRS notify you of an audit? What information does the IRS want during an audit? How long does the process take? We’ll answer these questions and more below.

Reasons for an IRS Audit

There are a few different reasons why the IRS selects people for audits. One way is through computer software that uses a statistical formula to compare your tax return with the averages of similar tax returns. Making math mistakes, not reporting all income, or claiming deductions that aren’t deserved are all things that can lead to an audit. Another way the IRS selects for audits is by someone being associated (through transactions) with another taxpayers who has been selected for an audit. If your tax return is selected, an IRS auditor reviews your tax documents before deciding to accept it or continue on with the audit process.

Receiving an IRS Tax Notice

The IRS will never call or email you about to notify you that you’ve been selected for an audit. Instead, you’ll receive an IRS tax notice by mail which includes contact information as well as instructions. The IRS does audits by both mail (mail audit), through in-person interviews which could take place at an IRS office (office audit), or at a taxpayer’s place of business (field audit). These three are the most common types of audits. It is possible to request an in-person audit if the documents that the IRS requests are too many to mail.

Documents that the IRS Commonly Requests for an Audit

There are a variety of different tax documents that the IRS can request during an audit. These include bills, receipts, canceled checks, legal papers, loan agreements, theft or loss documents, and employment documents. This is why ensuring that your books are up to date and kept meticulously are extremely important. In the case that an audit was to occur, all the documents should be on hand and ready to go.

The IRS Statute of Limitations

The IRS can audit returns that were filed in the last three years, although in situations where more substantial errors have been identified, they can go back additional years. Most commonly, however, audits are conducted for returns filed in the last two years.

The Length of Audits

Generally speaking, most audits take less than a year to complete. Mail audits are typically the fastest (three to six months) while field audits can last up to a year. The length of an audit is based upon a multitude of different factors which include the complexity of the issues, the type of audit, the type of information that has been requested, as well as your response to the audit report.

Conclusion of an Audit

There are three ways an audit can end. In the first scenario, your items are reviewed and there are no resulting changes. The second way an audit can end is if the IRS proposes changes, and you accept those changes. If you owe money, there are various payment options that are available. Lastly, the third way is if the IRS proposes changes, but you don’t agree with those changes. If you don’t agree, you can schedule a conference with an IRS manager, as well as file an appeal if enough time is left on the statute of limitations.

In this article, we’ve covered some of the most common questions people have about IRS audits. There’s no doubt that there’s a lot more to audits then what we’ve outlined here, some of which can become extremely confusing. We always suggest consulting with an experienced tax team that you can rely on to guide you through the audit process and represent you during an audit to ensure you get the best possible outcome. At IRS Audit Group, we have over 15 years of experience in dealing with the IRS specifically dealing with IRS and state audits. Call us today at 1-888-300-6670 for a free consultation and more information about how we could help you.

As required by the California Department of Tax and Fee Administration (CDFTA), all retailers engaged in business in the state must pay the state’s sales tax. This applies to all sales of goods and merchandise in the state, as well as to all purchases shipped to a consumer in California—regardless if the sale is made by the Internet, telephone, or mail order. The sales and use tax rate is dependent on the specific location in California that a retail does business in and includes a state, local, and district tax.

What is a BOE Sales and Use Tax Audit?

The revenue from sales tax that California collects funds the state’s General Fund, which is used for schools, parks, road, and other public programs. As a result, the California State Board of Equalization, which administers and oversees the tax code, vigorously seeks enforcement and compliance. What does this mean for business owners? The Board of Equalization (BOE) regularly conducts audits to check that businesses are accurately collecting, recording, and reporting the sales tax. Audits are especially common for businesses in which cash transactions make up great deal of the total sales. Audits are also more likely to occur if you’ve had late payments or filings, or if you’ve had tax issues in the past.

This is one of the primary reasons why it’s extremely critical to make sure your tax records and bookkeeping are always up to date and done meticulously. In this case that an audit was to happen, all the records would be ready and accurate. If the BOE wants to audit your business and your books don’t add up, this can create a host of problems. To begin, a sales tax liability will be assessed against the business owner, who has to pay the amount owed within 30 days. Additionally, adjustments to the sales and use tax returns can also impact your income tax returns.

How Can a BOE Audit Impact Income Tax Returns?

When the Board of Equalization conducts an audit that results in adjustments of total sales, it will provide the California Tax Franchise Board with a copy of the audit report. It’s typically the case that an adjustment to the sales and use tax return will also require an adjustment to the income tax return. This is because has an impact on various tax items, most commonly total sales and business expenses.

What to do if an Audit Results in an Adjusted Sales and Use Tax Return?

While an adjustment to a sales and use tax return can certainly be stressful, there are certain steps you can should take to prevent the problem from going any further. Make sure to review the audit report and compare it with your income tax return in order determine whether or not an adjustment needed is needed on your income tax return. If an adjustment is required, an amended income tax return must be filed. If these steps are avoided, the State Franchise Tax Board will determine if an adjustment is necessary based on the report and in in the case that it is, make the proper adjustments which you will be liable for.

If your business is currently being audited by the BOE, or if an audit has already been conducted and deemed that adjustments are necessary, we always suggest using a tax attorney who will oversee every step of the process. At IRS Audit Group, our experienced tax team make it a priority to deal with each and every case with special care and attention. Call us at 1-888-300-6670 today for a free consultation regarding your state or IRS tax audit.

The last thing you want to hear from the IRS is that they’re conducting an audit on your taxes. This consists of the IRS carefully reviewing your taxes determine whether all of your income, expenses, and credits are reported accurately. While audits may sometimes be random, they are most typically initiated when there are major red flags in your tax filings. While everyone wants to make sure that they’re not paying more than they should on their taxes, no one should be deceitful when filing their taxes. This can result in major consequences that begins with an audit. In this article, we cover the top three reasons why people end up being audited by the IRS, giving you the inside scoop on what to avoid doing.

1. Reporting Too Many Expenses
There is no doubt that reporting expenses can be tricky, but you have to remember to only report expenses which are necessary for the career field you are in or for performing your job. These are the only types of expenses are eligible for a deduction. A home-office, for example, has expenses such as utilities, maintenance, and even a designated phone-line for the business. However, in order to qualify for this deduction and report these expenses, the home-office must be your principal place of business and not just a place where you sometimes answer calls and respond to emails. In addition to reporting expenses which aren’t essential to your job duties, a huge jump in your expenses from the prior year can also raise a red flag. The bottom line is that all expenses should be justified—if you feel you deserve it, then report it, but nothing more. If you do report a lot of expenses, make sure to track all expenses by keeping good records and receipts.

2. Not Reporting All Income Streams
This is particularly relevant to those who are self-employed, do freelance work, or collect stock dividends. It may be tempting to report only your central stream of income on your W2 and avoid reporting these “nonwage” incomes (as they are referred to as) on your 1099. Do not make this mistake! Most often it is the case that the IRS already knows about these other sources of income considering nearly all companies who pay you report having done so to the IRS. According to data from the IRS, people in higher tax brackets and people who report no income at all are the two groups who are most likely to be audited. Make sure you report all your sources of income to avoid an IRS audit.

3. Math Errors That Don’t Add Up
Whether it’s writing a 6 instead of a 9, leaving off a 0 at the end of a number, or reporting figures that don’t add up, you need to make sure to avoid math errors. While this may seem quite obvious, the number of audits triggered by silly math mistakes are surprisingly high. One of the first things the IRS checks is to see if all of the numbers make sense at a basic level. Even with tax software, this is still a major issue. Make sure that all of the numbers that you transfer from your statements into the software are accurate. We also suggest doing a quick double-check just to avoid any future problems. The extra few minutes of time this requires will ensure that you don’t get selected for an audit due to a silly mistake.

Also, click here to see how far back the IRS can audit.

Following these simple steps can help avoid the IRS choosing you for an audit. However, if it is the unfortunate case that the IRS has chosen to audit you, our team of tax attorneys, CPAs, and tax professionals at IRS Audit Group is here to help. Call us today at 1-888-300-6670 if you have questions or need help, and visit our blog for more helpful guides.

Many people may wonder if they qualify for an IRS audit reconsideration. For those that don’t know, an IRS audit reconsideration is when the Internal Revenue Service reassesses the outcome of a previous audit. This is typically something a taxpayer applies for because they believe the IRS has made some sort of mistake in a previous audit.

This can be an audit involving either unpaid taxes, the reversal of a tax credit or really anything else. The Internal Revenue Service decides which audits it will review again. In the guide, we will discuss the circumstance in which you may qualify, the requirements to apply and what the possible outcome could be for you.

How To Qualify This is what the IRS mostly looks for when deciding to reassess an audit; any sort of error in processing on the Internal Revenue Service’s end, an original delinquency return that was filed after a resulting SFR procedure or an assessment made without certain key information considered by the IRS. These are not the only circumstances, but these are the ones that the IRS is most likely to consider.

How To Not Qualify Those that will typically not qualify for the IRS Audit Reconsideration program are anyone who entered into a final decision with the tax court, anyone who applied for a reconsideration request and didn’t provide any more information or anyone who made a compromise under Sec. 7122.

Requirements An IRS audit reconsideration request is definitely something that you want to do and go over with your certified tax accountant. They can help guide you towards the proper process of applying for a reconsideration request. To apply, you will need to submit several different documents. The main one would be a statement of your case.

This statement will detail what you believe needs to be corrected and why. To help improve your case and the chances of the IRS siding with you, you should include any information you have that supports your argument be it bank statements, tax forms and anything else.

Possible Outcome Waiting for an outcome from an IRS audit reconsideration request can sometimes take a while. In some cases, up to seven months. When you do finally get a decision, the IRS will communicate what it’s decision is and why. If you disagree with the Internal Revenue Service’s decisions, you do have the option to meet with the Appeals Office.

For information regarding how you can complete an IRS Audit Reconsideration Request, contact our team at IRS Audit Group in Newport Beach or IRS Audit Group in Beverly Hills. We can assist you with all of your tax needs and guide you through the process so you get the best possible outcome.

To deal with budget shortfalls, state governments revenue agencies continue stepping up their efforts in raising revenue through sales tax audits.

You never ask for it, but you have been selected for and will be notified of a sales tax audit. At that point in time you may get confused – What should you do and what you should not? Most companies are not regularly audited by the state for sales and use tax purposes, so it is unlikely you have previously handled an audit. While the requested lists of records and documents that will be reviewed appear straightforward, there is much more to handling a sales tax audit. There are a lot of potential pitfalls during the interaction with auditors that may occur as you address the questions they typically ask.

Here are a few tips to Manage Your Sales and Use Tax Audit from IRS Audit Group Newport Beach. The best practices as listed below need to be considered in such situation.

Hire an external representative tax expert. IRS Audit Group Newport Beach has a pool of experts specializing in State Sales Tax matter. Once you are identified for audit, it is better to initiate communication with experts. They can discuss the audit process with you, provide some background on various sampling methods, and provide insights on specific industry issues targeted by the state. Also, make them aware of the initial schedules vs. revised schedules.
Ask your tax expert from if it is appropriate to perform a refund study or reverse audit at the same time to identify potential opportunities for refunds. IRS Audit Group Newport Beach can provide immediate solutions to such questions.
Do not engage in contingent fee arrangements on questioned items by the auditor unless you have already made the first pass. Otherwise, you may be paying them on reductions for errors made by the auditor or obvious exempt transactions.
If sales state tax auditors are doing a refund study/reverse audit, their fee should not be based on savings in periods outside the audit period. Their fee should always be based on offsets actually granted by the state. Payment should be made at the end of the audit, or a provision should be included to reverse any offsets not allowed.
A sales tax audit is not an ordinary occurrence. Therefore, you need to invest the proper efforts internally or with external assistance from experts like IRS Audit Group Newport Beach.

Lastly, be ready to play defence. Do not assume all questioned sales and purchases are taxable. Familiarize yourself with the regulations of your state with the help of expert advice from IRS Audit Group Newport Beach. Once you are convinced that questioned item should not be assessed, go ahead and challenge it. Also, understand any sampling techniques employed by the auditor, and be sure samples used are representative of your operations. If you have not experienced a sales tax audit before, and unfamiliar with your state’s regulations, or you have identified significant problem areas in your self-review, you may want to consider engaging a tax advisor to assist in your defence.

IRS Audit Group Newport Beach professionals are knowledgeable and experienced in assisting companies undergoing state sales and use tax audits as well as conducting overpayment reviews. Let IRS Audit Group Newport Beach help you navigate the audit landscape.

Getting an audit notice from the state department of taxation used to be a scary experience. The IRS isn’t the only government agency that can send you a notice about your taxes. Agencies such as the California State Tax Audit, and the Board of Equalization can also inquire about the taxes you filed. The law places the burden on you to demonstrate that your state income tax return information is correct.

It is always unpredictable when it comes to getting an audit notice or an examination by the IRS. However, plenty of help is available by contacting experienced tax relief attorney like IRS Audit Group Beverly Hills to deal with the taxation authorities on your behalf.

How the State Taxation determines and What State Taxation Authority looking for in a Tax Audit?

State Income tax audits are done primarily as office audits. State taxation authorities use tax audits to determine if you properly reported your income, deductions, exemptions, and credits in your income tax filing. They may request you to provide supporting records in person, on phone, or by mail to prove that your filing is correct.

Auditors cross-match state and federal return data verify that all income reported on information returns has been included on the state return, that deductions taken on the state return are valid, adjust based on audits conducted by the Internal Revenue Service, and conduct domicile investigations.

State Tax Audit Defence Lawyer from IRS Audit Group Beverly Hills
Being selected for a state tax audit is not necessarily an indication of any tax fraud. Even if you don’t have any unfiled tax returns, and are certain that all information you have provided to the state taxation authority is correct, still you may get audited. The state tax auditor seeks to uncover honest record-keeping mistakes, as well as possible tax fraud. It is important to understand that any information you provide to the state tax examiner can and will be used against you.

It is always a good idea to be represented by a tax lawyer provided by from IRS Audit Group Beverly Hills, who understands how to deal with the state taxation authorities in a tax audit.
As an experienced tax attorney from IRS Audit Group, Beverly Hills will explain the standard procedure in a state tax and also elaborate their process to verify the accuracy of a taxpayer’s returns.

Hence, protect your rights by being represented by a tax attorney from IRS Audit Group Beverly Hills, who understands your situation, as well as state and federal tax code. The first and the best thing you can do in the event of a state tax audit is to invoke your right to legal counsel before answering any questions or providing any documentation regarding your case.

What Happens if the State Tax Auditor Uncovers Items which you Cannot Substantiate?
Even if the state tax auditor determines that you owe back taxes (plus any interest payments or penalties that may have accrued), there are several avenues that your tax attorney from IRS Audit Group Beverly Hills can help you. Depending on the situation, your attorney can help you to set up a tax payment plan, negotiate an offer in compromise, seek a penalty abatement or currently not collectible status, or file a state tax appeal.

If you have received notice of examination or documentation from the state taxation authority informing you of your rights during the state appeals process, you should act quickly to obtain legal tax representation. Contact RS Audit Group Beverly Hills California for a free initial consultation today at 1-888-300-6670.

An IRS tax audit can be a big issue for you and your business if you have some tax problems.  A few important tax problems like IRS problems and Payroll tax problems can bring the attention of IRS tax audits.

So, what to do if you get audited?  Unfortunately, some unlucky people end up in getting audited.  Here are a few suggestions from IRS Audit Group, Newport Beach.

Seventy percent of audits are just a letter asking for more information about your tax returns, and you’re asked to mail back forms proving your income or deductions.  In other cases, you’ll get an invitation to meet with an agent to discuss your tax forms.  Most of the time the letter you get in the mail is just a simple request for information – the IRS just wants you to mail in your 1099 form, for instance, or they want to see receipts for the business meals you deducted.

If you’re trying to beat an IRS audit without a professional tax relief service, it is like committing suicide as the chance of winning the battle against IRS audit is very low.  There are more chances of a big crash in the battle.

Well there’s no need to panic, but there are certain steps you should take.

Don’t ignore the letter, ignoring the IRS is the worst possible thing you can do.  The situation won’t go away.

You’ll need to grant power of attorney to your audit representative, to let them handle everything while you stay home or doing your business peacefully.

The professional tax representation services form  IRS Audit Group, Newport Beach helps you in different issues like back taxes, unfiled tax returns, IRS wage garnishment, IRS bank levy etc.  The tax matters are very technical and need specialized technical knowledge about various tax issues.  The experts at IRS Audit Group, Newport Beach can get you IRS tax relief if you have any tax problems with back taxes, IRS tax debt, late filing, tax penalties etc.  They can bring you substantial tax relief with their expertise and experience.

That’s why you need not be panic if you can’t find the information they’re looking for, the Tax professional can advise you on your next move.  Tax professional s can help you with analyzing issues, finding appropriate solutions which would result in permanent resolution to your tax problem, thus peace of mind.

Our IRS Audit Group experts can help you to do better against an IRS audit.   IRS Audit Group, Newport Beach is a team of professionals experienced in the field of IRS tax controversy, tax problem resolution experts consist of tax attorneys, EAs (Enrolled Tax Agent Experts), CPAs.  They are experts and they already have the experience of handling various tax issues for different clients.  Handling an IRS tax audit is very simple for them.

IRS Audit Group located in Newport Beach and Beverly Hills, we also have an office in Greater Los Angeles with  15 plus years experience in representing to IRS.

Before knowing the tips, let us understand what exactly IRS is and what they do? The IRS stands for “Internal Revenue Service” is a government agency of the Federal Government, and its main duty is to collect taxes.  Apart from this, the IRS performs various other related duties.

The IRS ensures that they process all the returns filed each year in order to improve, taxes payments, and issues refunds owed to taxpayers.  Thus, if your return has been set aside for assessment then you need to know tips in order to endure the proper follow up of IRS tax audit.  IRS Audit Group – Beverley Hills has compiled five tips for you now.

Featured article – Tax Audits: Understanding IRS and State Tax Audits

Why am I being audited?

If you are selected for IRS tax audit it does not mean there is a problem.  The IRS compares your tax returns against “norms” by computer screening.  But don’t delay to respond.  Now, here are five tips on IRS tax audit as suggested by IRS Audit Group – Beverley Hills.

1. Responding to the Notice

First and foremost you should not ignore the notice letter instead respond to it within the given time.  If you take the audit notification letter for granted then you might end up paying more money than what was actually required.

If the audit notification letter specifies a field officer then you must call and contact them rather than arranging an office auditor in the home or place of business. If you are a resident of Beverley Hills, then you can take the service of IRS Audit Group.

Featured article: IRS Audit – How far back can you be audited?

2. Enquire the Reason for the Audit

The IRS must and should mention the reason in the notification letter as to why you are receiving this letter, and if you don’t really understand the script then you have every right for seeking clarifications.

You should be very careful about how you are asking questions and avoid all the situations that might bring up some other issue as they would be very precise in your words.  If something pops up which is outside the scope then they might look into that as well.

3. Organize your documents well

Remember that the auditor from the IRS is just a person hired to perform that job and if you present all the necessary documents then their job will be easy and they need not go out to find a problem.  So, as soon as you receive the notification letter you need to organize all the paperwork which is relevant to your case and there are some bills or documents which might come handy, they are:
a) Earning statements like W-2 or 1099
b) Medical Bills
c) Internet bill receipts, etc.

4. Hire a Representative

Sometimes when having a discussion with the IRS auditor you might get frustrated and it might end up in an angry manner so it is always better to hire a representative to talk on behalf of you to continue the talk in a professional manner and this could be a benefit.
In many cases, you can complete the form and your representative can attend the audit meeting for you.  If you are a resident of Beverley Hills, please be in touch with IRS Audit Group – Beverley Hills

5. Know your rights

As an individual taxpayer, you have every right to ask questions during the trial.  So, while you disagree with certain statements put forward by the auditor, you must know your rights, the process and the law behind the deductions.  Becoming more aware of the rules and regulations will make it easier for you to complete the process.

The team at IRS Audit Group – Beverley Hills is available for your services at any time and please be in touch with IRS Audit Group – Beverley Hills.

How Far Back Can the IRS Audit?

Wondering how far back the IRS can audit you? The Internal Revenue Code, Section 6501, provides the statute of limitations. A statute of limitation is a law that provides a maximum time in which the taxpayer and the IRS must, “initiate legal proceedings from the date of an alleged offense.” Therefore, how far back the IRS can audit you depends on the circumstances of the tax return.

According to the U.S. government, the IRS can request for returns filed within the last three years in an audit. Though the IRS typically does not audit for documents older than 3 years, if there is a significant error upon filing past returns, it is possible for the IRS asking for necessary documents.

The statute of limitations starts on the original due date of the tax return. The statute of limitations starts on April 15th of the year that the tax return was due. So, if you filed your 2013 tax return on April 15, 2014, then the IRS would have time until April 15, 2017, to audit it.  However, if you had requested an automatic extension and filed tax return on Oct. 15, 2014 then the IRS still has time until Oct. 15, 2017, to audit your return and assess any additional tax and penalties due.

Even if you do your best with your taxes, taxes are horribly complex, and you may be asked for more information on IRS collection. Make sure you keep all records to stay ready for any requests by the IRS. Here are a few tips form IRS Audit Group about tax laws that sets a time limit on IRS tax audits, and how far back the IRS can audit.

How far back can the IRS audit you?

Below are the three different time frames and descriptions of when each applies for the IRS to audit your tax return according to the analysis done by tax law professionals at IRS Audit Group:

3 Year Period:

This is the standard amount of time that the IRS has to legally audit tax returns.  This is the time period that applies if you do not fall into any of the two categories listed below.

6 Year Period:

If the income on the tax return was understated income by 25 percent or more, the statute of limitations to audit the return can be extended by another 3 years.  It is worth noting that the IRS doesn’t consider any amount as omitted from gross income if you disclose it in the tax return, or in a statement attached to it.

Unlimited Time Period

When there is a massive amount of tax understatement, the IRS legally has six years to confront the return. However, there are three exceptions which extend it to an unlimited time period.

In the event of one of the three exceptions, the IRS has an unlimited amount of time to audit and charge penalties and interest rates. Specifically, you may be subject to accumulate taxes, penalties and interest without any time limitation if one of the three exceptions apply:

1.      The Taxpayer Filed a false tax return,
2.      The Taxpayer attempted to illegally evade paying taxes
3.      The Taxpayer Failed to file a tax return.

How Long Does IRS Audit Process Take?

An audit may seem like it takes an eternity. For some people, an audit will take longer than others. The IRS cannot determine exactly how long an audit will take; however, the IRS, too, is in favor of a speedy process. In other words, the IRS would like to get the procedure completed as soon as possible. Numerous items can prolong an audit — we suggest visiting the IRS website for a thorough elaboration, though, IAG has created a quick analysis on what may extend an audit process time.

Delaying by not providing

Not providing the IRS with the documents in time can lead to further issues with the IRS, and prolonging the audit process time. It is not recommended to delay the documentation simply buy some time.

Other reasons for a delay

An audit can likely lead to disagreements. And sometimes you may not be able to meet on time because of conflicting schedules. These conflicts are to be expected, and the IRS does attempt to work with the auditees to try and make sure that it runs smoothly.

Causing a delay is not a wise idea. This can upset the auditor, and one of the most important things to remember during an audit is that the IRS is a bold collection agency. They can freeze your accounts; garnish your paychecks; and take away property and assets. With all of the power they wield, to not delay. Instead, speak to a certified tax professional to know more about an extension period.

Disagreement On How Far Back The IRS Can Audit

Disagreements are normal, and it is likely that the auditee and the auditor may not agree on certain aspects of a return or findings. IRS Audit Group has tips on how to treat a disagreement assertively.

How to handle a disagreement

If you do not agree with the findings in an IRS audit, one can request mediation and to speak with an IRS manager. It is even possible to appeal the findings. However, this may only be possible if it is still within the statute of limitations because, as mentioned above in How Far Back Can the IRS Audit?, it can depend on how far back the IRS can audit you. But first, IRS Audit Group we advise to consult with a tax attorney beforehand. To learn more, speak to a tax attorney or consultant at IRS Audit Group.

It can get worse

What happens if you do not comply with the IRS’ notices? The problem remains, and interests and penalties may accrue — in short, a delay. Disagreements in how to handle a certain deduction or how to handle incoming funds can delay things further. It is possible that these disagreements would require the auditee and the IRS to go to tax court. We highly recommend to not resort to these methods, or go to tax court without proper representation and consultation. Regardless, as a taxpayer or auditee, it is imperative to know and fully understand Your Taxpayer Rights.

Learn More

If you are still unsure, do not hesitate to reach out for help. If you have more questions regarding taxes, and IRS audits, contact us. Our knowledgeable operators will connect you to a competent tax attorney at IRS Audit Group offices in Beverly Hills or Newport Beach. Regardless the tax situation, we will help resolve your tax matters assertively, efficiently, and responsibly. We serve customers nationwide.