While the IRS conducts hundreds of thousands of audits every year, if you are being audited, this is far from a routine situation. If you are not careful, your IRS audit could lead to substantial liability; and, depending on what the auditors find, it could potentially even lead to allegations of criminal tax fraud. Here, Maryland tax defense attorney Kevin E. Thorn, Managing Partner of Thorn Law Group, discusses five critical mistakes to avoid if you are being audited by the IRS:
Mistake #1: Assuming Everything Will Be Fine
The fact that you are being audited does not necessarily mean that you have done anything wrong, and many IRS audits are resolved without additional liability. However, this does not mean that you can assume everything will be fine. While some IRS audits are random, most are triggered by specific issues or events (i.e. an “irregularity” flagged by the IRS’s computer systems or your name coming up during another audit). As a result, you need to take your IRS audit seriously, and you need to accurately determine whether or not you have paid all of the tax that you owe.
Mistake #2: Submitting a Hasty or Unsubstantiated Response
Dealing with an IRS audit can be time-consuming, frustrating and downright annoying. But, when responding to the revenue agent’s inquiries, it is important to set these emotional reactions aside. You need to take the time to prepare a thorough and accurate response, and you need to make sure that any information you submit can be substantiated by documentation that you have in your possession. If the revenue agent has follow-up questions about your response, being unable to provide substantiating documentation can quickly make your situation go from bad to worse.
Mistake #3: Knowingly Submitting False Information in Your Response
When you are facing an IRS audit, the revenue agent is not simply going to take you at your word. If you knowingly submit false information in your response, the revenue agent will find out, and lying to the IRS is a federal crime that carries fines and potential imprisonment.
Mistake #4: Simply Accepting What the Revenue Agent Says You Owe
At the conclusion of your IRS audit, the revenue agent will issue a Revenue Agent’s Report (RAR), and this RAR will state the additional tax, interest and penalties that you owe. If you receive an RAR, you must pay what it says you owe unless you file an appeal. However, if you take a proactive approach to your audit, you may be able to avoid this outcome by negotiating a settlement agreement or an offer in compromise.
Mistake #5: Not Hiring a Maryland Tax Defense Attorney
The federal tax laws and regulations are extraordinarily complicated, and an IRS audit is itself an intricate and complex process. If you are being audited, you need to rely on the advice of an experienced tax defense attorney.
Contact Maryland Tax Defense Attorney Kevin E. Thorn, Managing Partner of Thorn Law Group
Are you being audited by the IRS? If so, Maryland tax defense attorney Kevin E. Thorn, Managing Partner of Thorn Law Group, can help you avoid unnecessary liability. To schedule a confidential initial consultation as soon as possible, call 240-235-5096, email ket@thornlawgroup.com or contact us online today.
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