Recent reports have placed the IRS at odds with the will of Congress and the legitiimate deductions businesses and individuals may claim on their tax returns. The two areas of concern include:
1. Tax Credits for Research and Development under Section 41 of US tax code), and
2. Deductions for preservation and environmental conservation under Section 170(h)
While Congress has recently extended existing legislation, or passed new laws to encourage businesses to conduct research and development and to increase the preservation of land the IRS has stepped up audits when these legitimate deductions or tax credits are applied. The IRS has approached returns with these issues as “overstated” or “inappropriate” and has reportedly increased audit activity when a return includes either legitimate deduction or tax credit.
This is a fairly common issue with the IRS. It is also a perfect example of why a US taxpayer or business should never interact with the IRS without expert representation from an experienced IRS tax attorney. The tax team at Allen Barron is constantly challenging the audit tactics of IRS auditors, and are compelled to educate many auditors on standardized accounting practices and legal deductions under US tax laws.
If you are concerned about or have been contacted by the IRS regarding an audit, we invite you to contact us for a free and substantive consultation at 866-631-3470. It is important to understand the protections of the attorney-client privilege and to work with a team that is able stand up to the IRS to protect your legal and financial interests.
