dontbeafraid

The word Audit just got more intimidating!

Admit it, the word AUDIT is very scary. No one wants to receive a letter that says: Hey! we are not so sure about what you claimed on your return, we’d like to “take another look.” Now the burden of proof is on YOU! Did you keep great records? If so, will they stand up to the heavy standards of IRS? Do you understand the tax law or did someone else help you with the return? No matter the answers to those questions the fact still stands, the IRS has your number.

We have all been aware that audits and audit flags are scary but we had some peace of mind knowing if we got away from the three year mark we were pretty much in the clear, right? Well, things are getting tougher and the IRS is expanding their chokehold on taxpayers.

The IRS stretches its collection arms further!

If you omitted 25% or more of your income, the IRS has now doubled their audit window. Instead of three years, the IRS now has SIX years. So file your return even if you don’t pay and help close up some statutes.

What does it mean to omit income?

This topic has been under debate for some time, but IRS is saying that if you misrepresent gains, this could count as an omission. Maybe you received a W2 that you “forgot” to include; that is an omission of income. Perhaps you have some funds abroad that you did not report. Did a family member give you a gift or a loan? Many, many things may count as omitting income. Tax law is very complex and some of the terms will need further clarification from someone who specializes in the code.

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NO TIME LIMIT!?!?!?!?

If you fail to file a return or willfully misrepresent key facts: the IRS has NO time limit, they can audit you FOREVER! That is right, they can pull that return and come at you for the rest of your life!

In my practice, I am noticing a great increase in the amount of businesses and individuals who are being audited. The IRS will use whatever leverage or loophole in the code to collect. Don’t stand by and think three years is over and you are safe. Protect yourself, file your return correctly with an Enrolled Agent or CPA, if you are being audited exercise your right to representation, and hold on to your records for as long as possible as it seems IRS is digging further and further back.

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