Most taxpayers panic when they are served with a letter from the Internal Revenue Service(IRS).People will start to get worried and anxious while they try to remember how they handled their financial documents and paperwork in the previous financial year. The thought of an oncoming assessment and the real possibility of being compelled to pay more taxes can be quite overwhelming. There are also other penalties to worry about if a taxpayer is found guilty of overlooking mistakes when they filed their returns. You do not have to deal with the IRS on your own because there are competent representatives who can help you figure out things and offer professional advice on how you can proceed to get yourself off-the-hook.
The objective of the IRS conducting audits is not to cause panic or uneasiness on the part of the taxpayer. What the IRS tries to do is to make sure that the taxpayers’ numbers add up and are verifiably congruent with what has been filed in the tax returns. One of the objectives of conducting the audit is to attempt to reduce the tax gap, which refers to the difference between what you owe the IRS and what the tax agency has received. An audit notice can be received randomly, while in some circumstances, it is served when there is some suspicious activity.
Some of the things that attract the attention of the IRS can include rounding of figures neatly and conspicuously. If your financial documents contain figures that are not in simple intervals, you should avoid making approximations. However, when you find it necessary to approximate, round off the numbers to the nearest dollar. For instance, if your filed business expense is $455.25, you can round it off to $455 and not $500.This way, you can avoid suspicion and subsequent audit for proof. It is also vital that you re-check your numbers when preparing your tax returns to make sure there are no errors. You might want to hire a tax professional to help you file your returns to be on the safe side.
If you are in business or self-employed, it is advisable to avoid filing personal expenses as business expenditure. This will lead you to report too many losses, which will eventually raise the alarm on how your business has survived. If you are to avoid any pitfalls with the IRS, ensure that your tax report is clean and deduct only the actual and essential expense incurred when you went around your business operations. Most taxpayers can be tempted to claim undeserved deductions, but you should keep in mind that the tax agency is well informed about the common and fraudulent deductions.
When you hire an audit representative, they will help you settle any arising disputes with the IRS. The representative will help you to compile all the necessary documents needed for the audit and ensure that your rights as a taxpayer are fully protected. A competent IRS audit representative will also help to ensure that you do not pay more than you owe, among other benefits.