There is no doubt that the IRS, in conjunction with other governmental agencies, has tremendous power. The IRS's main business, however, is to collect money for the government. Without the IRS, the government could never function. While our system of government and the tax system is basically considered a voluntary system, most people would disagree that our system is voluntary.
While the IRS has tremendous power to also file criminal charges against an individual, the fact that you receive a letter from the IRS does not mean that you are going to jail. Most of the time, the IRS is looking for clarification, missing information or additional information to complete a tax return. Sometimes, the IRS records do not match what the taxpayer is reporting. In these situations, the IRS will send out a questionnaire regarding those differences. Other times, the IRS' computers will just generate a bill or invoice. This happens usually when a stock or bond has been sold and the taxpayer has forgotten to report the sale on the tax return even though the actual sale may have produced a loss.
To protect the taxpayers' interest and to make sure that the taxpayer reacts quickly, the IRS may issue an assessment. These are routine letters, so there is no concern. The IRS is only looking to update their records and make sure that the information they have reconciles with the tax return filed.
In other cases, you may be audited by the IRS, the state, or other local tax agencies. If this is the case, you should sit back and take a deep breath because in audit situations, you could embark on a journey that could be very frustrating and very time consuming.
While most IRS agents are very polite and sympathetic to the taxpayers, some can be very intimidating. When an IRS Agent shows up at your door, it can be a very demoralizing experience. You may feel at a total loss of control and, worse yet, your case can be referred to the criminal investigation unit for criminal prosecution if the agent believes that a crime has been committed.
In the event that you are audited, you should be prepared. You should organize your documents and you should be able to present your case and protect your rights. If you are audited by the IRS or other state agencies, you have certain rights and you must make sure that your rights are protected. If you believe that you did nothing wrong than you have nothing to worry about.
It is very common that at the end of the audit there are no changes. The IRS or other tax agencies may even owe the taxpayer money due to the fact that they have under reported their expenses or the taxpayer was unaware that certain expenses were tax deductible.
If you are audited and you believe that the assistance of a professional is needed, you should keep in mind that there are only three types of professionals that can represent you before the IRS:
Many attorneys do not represent clients with a normal audit, but they step in the event that there are criminal charges filed against the taxpayer. Even most CPAs do not handle IRS and state tax audits. Most CPAs just handle business, financial matters and tax matters.
Enrolled Agents, on the other hand, are licensed by the Department of Treasury to practice before the IRS. Enrolled Agents expertise is in tax preparation and representation. Many Enrolled Agents are former IRS agents and they know the rules that the agents must follow and they are familiar with the IRS manual.
If you choose our firm to resolve your IRS or other tax problems, you can rest assured that your case will be handled by experts in the field that spent decades handling IRS Audits and audits from state and local governments. Our firm has an entire department dedicated only to audits. Our experts consist of Enrolled Agents and CPAs, and we are licensed to deal with the IRS on your behalf. We collect information from you and you will never have to meet or even talk with the tax auditor.
Much of our tax representation work is referred to us by other firms who do not handle this type of service. Many of our audits are handled just by writing a letter to the auditor explaining what has happened. However, if the situation arises, we will appear before the IRS and make the agent know that the client has certain rights. Should we fail at this first audit level, our team will be ready to appeal your case within the IRS and then ultimately bring your case before tax court. We have a great record of achieving successful audit representation for our clients.
When the IRS issues a notice of deficiency, the client has limited time to respond. This is a very sensitive process. If you fail to respond in a timely manner to these letters you may lose rights to dispute the tax liability and the IRS may assess the tax liability.
When you engage our firm to handle an IRS audit, you may feel comfortable that our fees are reasonable you will have an upfront idea of what the fee will be. We also advise you whether or not it is financially responsible for you to engage our firm. We have seen many clients engage other firms and spend thousands of dollars in fees where a tax liability was much less than what they paid their representative.
When we are engaged to provide tax representation services, we use our vast experience and our team meets to evaluate and assess the situation. We decide what approach should be taken and whether or not it is financially responsible for us to take on the case. We have offices throughout the Northeast so our offices and our professionals are within a few miles from where you are. Therefore, we do not charge a fee for travel expense nor do we ask for reimbursement for travel expenses.
CSI Group, LLP is not a law firm and clients are encouraged to obtain separate, legal counsel. Any reference to Will, Trust and Estate Planning provided by CSI Group, LLP and its affiliates are planning services only. CSI Group does not prepare any legal documents in the course of the planning services.
Taxes • Estates • Estate Planning