Pomona is a city that has reinvented itself to harness the changing times and changing opportunities. From the 1880s to the 1930s the city was considered “the country” and it was the “Queen of the Citrus Belt” for a time. By the 1940s, the middle-class lifestyle that had become synonymous with Pomona made it an attractive location to focus test new feature films. Today Pomona is aa diversified economic hub with major employers including the Pomona Valley Hospital Medical Center, California State Polytechnic University, Lanterman Developmental Center, Verizon, First Transit, and many others.
Why am I facing an IRS audit?
When a potential client calls in or comes into our office, one of their first questions is nearly always some variety of, “How could this happen to me?” For some taxpayers it may seem that everyone is cheating on their taxes. In the vein of the old proverb concerning “two wrongs not making right,” taxpayers would be wise to consider that others’ noncompliance with the tax laws has only, at most, a tangential effect on your own likelihood to face an audit.
However there are certain unfortunately all too common practices used by well-meaning, but ill-informed, taxpayers that can significantly increase the odds of facing a tax audit. For instance, taxpayers who fail to provide accurate figures due to rounding or only using whole numbers face an increased audit risk. As one might imagine, taxes and finances rarely produce neat, round numbers. So when a tax return contains numbers of this type, there is a high likelihood that the numbers provided are implausible and inaccurate.
Additionally, the IRS computes and uses what is known as a Discriminant Function System score (DIF) and Unreported Income DIF (UIDIF) score. The former is concerned with the potential for changes. The latter score is concerned with assessing the potential for the taxpayer to have unreported income. While the IRS claims that both scores are reliable indicators, they are not foolproof. If you have been swept up in a tax audit due to DIF, UDIF, or for other reasons the Hoffman Law Firm can work to reduce or eliminate the penalties you face.
What Can A Taxpayer Expect When Facing an Audit?
A taxpayer who is facing an IRS audit may have distinctly different experiences based on the form of audit that is selected. However, regardless of the form of audit the taxpayer will face, he or she will be required to produce certain fincial and tax documents. For tax documents, the taxpayer must retain at least six years of records and produce relevant records from that time period. For assets held by the taxpayer, supporting documents must be retained for at least the duration of the time where the asset is controlled or held by the taxpayer plus an additional three years. Payroll records must be retained in an accessible location for a minimum of four years.
As for the type of audit you may face, both in-person and by-mail audits are routinely ordered. An in-person audit is typically held at the location where the tax records are regularly kept. While the taxpayer may petition for a change of venue for the in-person audit, the IRS is not require to grant it. However, in circumstances where you can show a burden, such as a recent re-location, the IRS may be more willing to consent to a change of location. When a change is agreed to, the new audit location will typically be the local IRS office.
In the case of an audit conducted through the mail, the taxpayer must send relevant documentation by the postal service or via a private courier. In instances where the records are so numerous that it’d be burdensome to hold an audit by mail, the IRS may consent to holding an audit in-person.
Rely on our Tax Audit Experience
If you are already facing a tax audit or if you have concerns about unfiled taxes, unpaid taxes, undisclosed offshore accounts, FBAR, FATCA, payroll taxes, or other tax issues the Hoffman Law Offices can help. We are dedicated to assisting taxpayers facing difficult tax issues where civil or criminal tax charges are a possibility. To discuss how the Hoffman Law Offices can help you resolve your tax audit or other difficult tax situation call us at 800-897-3915 or contact us online.