We are often asked “How was I identified for an IRS Audit in the first place?” There are a number of issues which could trigger an IRS audit. Generally speaking, the IRS develops targets for enforcement each year based upon consistent areas of under-reported income, underpaid tax or areas where US taxpayers consistently attempt to push the boundaries on their tax returns.
The IRS uses complex algorithms to review millions of tax returns to establish a “bell curve” average. If the amounts on your return fall outside of the bell curve for a given deduction or source of revenue it can often trigger an audit. Another common reason to be identified for an IRS audit is a substantial change in the nature of your tax returns. You may have experienced a substantial increase or reduction in income or legally restructured business entities to reduce tax exposure.
Another common risk for US taxpayers is association with others who are under investigation or audit. For example, minority shareholders or investors in a company under audit may be pulled into their own audit as the IRS attempts to validate specific information, reported income, tax avoidance strategies or potential criminal mischief.
If you have been identified for an IRS audit it is important to know the IRS already has specific targets for the revenue they expect your audit to generate. This is not a random process.
It may also surprise you to learn you are not required to, nor is it in your best interest to speak or communicate with the IRS directly. If you have received notification of an IRS or California audit you need to understand what you are up against, your rights as a taxpayer, and the proven strategies to reduce or eliminate your exposure. This is why it is important to contact our offices or call 866-631-3470 today to schedule a free and confidential consultation with Janathan Allen. Learn about the protections of the attorney-client privilege and how to protect your own interests when you’ve been identified for an IRS audit.