A father and son who own several bars in Michigan learned a hard lesson in an IRS audit recently. The men were contacted by the IRS regarding an audit. The IRS was questioning income for the past few years and requested all business records and Point Of Sale (POS) records....
New IRS Audit Triggers Based on Recent Audit Data
There are many new IRS audit triggers based upon recently released data. What are some of the factors the IRS uses to select candidates for audit and how does this work? Most IRS audit selections are based upon sophisticated computer modeling that analyzes taxpayer behavior and deduction areas that are...
IRS Audit Rules for Partnerships Changing
The IRS audit rules for partnerships continues to evolve and change. In the fall of 2015 Congress passed the "Bipartisan Budget Act" that contained changes to the audit process for partnerships that goes into effect January 1, 2017. The old IRS audit rules for partnerships was based primarily upon the...
When Does a Hobby Become a Business in the Eyes of the IRS
What is the difference between a hobby and a business from a tax perspective? When does a hobby become a business in the eyes of the IRS? If the IRS disputes your "business deductions" as a hobby it could trigger an IRS audit and result in a substantial payment to...
IRS is Targeting Small Business Owners for Audit
An expert recently testified before a house sub-committee documenting the fact that the IRS is targeting small business owners for audit in disproportionate numbers. The IRS allegedly believes many small businesses receive much of their income in cash which is hard to track. The IRS would obviously usually make more...
California has the Second Highest Rate of IRS Audits
Recent audit figures released by the IRS show California has the second highest rate of IRS audits as a percentage of the population. Why does California rank so high on this list? The answer is as simple as the number of high income tax filers. Notorious bank robber Willie Sutton...
Challenges with an IRS Audit Involving Transfer Pricing
IRS revenue agents and auditors create many unnecessary challenges for multinational businesses who utilize internal transfers to gain a tax advantage. This presents major obstacles during an IRS audit involving transfer pricing and other international tax related issues. The experienced international tax and business attorneys at Allen Barron, supported by...
Why Shouldn’t You Try to Handle an IRS Audit Yourself and Call an Attorney Later if Things Don’t Go Well?
Have you received notification of an IRS audit? Will it be a field audit or office audit? Why shouldn't you try to handle an IRS audit yourself and call an attorney later if things don't go well? The simple answer is it will be too late to do anything about...
Would You Prefer to Write a Large Check during an IRS Audit …
Or write a much smaller check that will reduce the cost of the audit? If you have been contacted by the IRS for a field audit or office audit it is important to understand they have already developed a strategy for your audit. They have a revenue target associated with...