Beverley Hills is an area that draws tourists from far and wide to see the homes of celebrities, actors, and other members of the rich and famous elite that call Beverley Hills home. The truth of the matter is that regular, successful people also live in Beverley Hills and call it home. In light of the great success which is common in Beverley Hills and other nearby neighborhoods, ownership of a growing business and potential international connections are not uncommon. However, the presence of these factors along with a high income may mean that the individual is more likely than average to be audited. Furthermore, it may mean that the taxpayer has additional offshore disclosure obligations through FBAR and FATCA that must be addressed and satisfied.
The Hoffman Tax law Office can address your tax, FBAR and FATCA concerns. We understand that many taxpayers in the area face a significant likelihood of undergoing an audit. Therefore we work strategically to get your finances and tax filings in order to protect your business and assets from the consequences of a tax or offshore account deficiency.
Why Am I Facing an IRS Tax Audit in Beverly Hills?
There are many actions that can trigger an IRS audit. However sometimes the reason behind the audit is simply because you were randomly selected by the IRS’ computer system. However, in other instances a specific act or factor may be the item that triggers an audit. One of the most common reasons a taxpayer is audited is because he or she failed to include all sources of income in his or her income tax filing. This is an easy issue for the IRS to identify because the systems used by the agency match forms and match information. If a corresponding form is missing, it is highly likely that the taxpayer forgot to include or willfully concealed it. Similarly, providing information other than what appears on your W-2 or 1099 will also greatly increase an audit risk. Other factors that may trigger an audit include:
- Significant business losses over a sustained time period
- Audit by association
- Aggressive tax positions
- Levels of income
- Claims for expenses or exemptions that fall outside the norm for the business type and size
Many of these factors are captured and used to calculate the likelihood that the taxpayer has understated his or her taxable income for the year. This computation is captured in what is known as a DIF score. The DIF score reflects the probability that a taxpayer has failed to make a sufficient tax payment for the year. The IRS claims that the metric is reliable and utilizes it in its decisions to pursue an investigation. An experienced tax attorney can help you assess your audit risk, identify potential problem areas, and respond effectively to the IRS’ allegations.
How Should I Engage in the Audit Process?
Despite Hollywood images of the in-person audit, most individual taxpayers who are notified of an IRS audit will typically handle their audit through correspondence. This means that the audit is handled through the mail or via private courier. While the taxpayer may request an in-person audit, the IRS may grant the request but it is not obligated to do so. Typically, a request for an in-person audit reflects the audit of a business or a particularly serious problem with personal taxes. In-perosn audits are typically conducted at the site where the company’s books and records are regularly kept.
For all audits the taxpayer must make available all relevant records for the timeframe. Records which should be provided include records regading assets, payroll records, and tax records. Information regarding assets must typically be retained and produced for the time where the individual owns the item plus an additional three years. For payroll tax information, records should be retained for four years. For tax records, up to 6 years of past filings can be examined by the IRS. If you need more time to contact a lawyer and gather these documents the IRS will typically allow it, but you must request it.
Rely on an Experienced Tax Lawyer in Beverley Hills
If you suspect that you made a serious error on past tax filings or are already facing a tax audit, the Hoffman Tax Law Offices can help. Or schedule a free, private tax audit consultation call us at 800-897-3915 today or contact us online.