Being audited by the IRS can be frightening, but odds are in your favor. In 2015, the number of audits conducted by the IRS fell for the third consecutive year with only 0.84 percent of taxpayers dealing with audit procedures. While the steady drop in audits might sound like good news, don’t take too much liberty when you file your taxes in 2016. There are still several red flags that could land you on the audit list and then you could be in hot water if you tried to cheat the system.
The IRS does not frequently audit taxpayers unless there are red flags on your tax return. For instance, you might have too many deductions compared to your earned revenue or your charitable donations could be higher than normal for your income bracket. If you do get flagged for an audit, don’t panic. There are several steps you should take immediately to make sure you are protected.
First, take time to familiarize yourself with current tax laws. Knowing your legal rights can help you deal efficiently with IRS audits. Make sure you know what actions the IRS can legally take to investigate you and know when it’s within your rights to refuse their requests.
Second, take time to look back over the tax return in question and make sure it was accurate. If not, you may need to file an amended return to avoid any consequences. Moreover, by exactly knowing the amount that you’re paying annually, you can decipher if the IRS is overcharging you with taxes. If you end facing an audit, you have a right to request IRS transcripts of your case. If you are having problems with an IRS agent, you also have the right to notify the national office of the IRS. Knowledge of the law will not only protect your rights as a taxpayer, but it will also prevent you from going through unnecessary legal proceedings.
Before you talk to an IRS agent about your audit, gather all the proper documentation to defend your claims. Having accurate records and receipts is vital especially when you’re facing IRS problems. You should have a particular spot where you file all your documents and where you can easily retrieve the files. Dealing with IRS problems can be very intimidating, but just a little organization on your part can make your case less disturbing.
If you are facing an audit interview, remember to be careful with what you say. Do not ever give spontaneous information to the IRS. While you are just trying to be helpful and honest, the IRS will sometimes turn the information you share against you to open up further investigation. Never openly give information unless asked for it specifically. If the IRS auditor asks you to bring particular documents, bring only the specified documents. Remember that loose lips sink ships, especially when dealing with IRS agents.
In most cases, your best course of action is to hire an experienced attorney who is familiar with the IRS audit process. When a huge sum of money is at stake, do not attempt to settle your case on your own. By hiring a tax attorney to represent you during the audit, you will insure that your legal rights are fully protected and you don’t have to pay a penny more than you really owe.
If you owe money to the IRS and can’t afford to pay it, you could face some serious consequences. The IRS will stop at nothing to collect outstanding debts and even if you are already strapped for money, they will levy your bank account or put a lien on your property. You can’t afford to ignore the collection letters because a tax lien could be disastrous.
When you have a federal tax lien on your property, it will destroy your credit and make it next to impossible to receive a mortgage or auto loan. The lien will also be noted in public records so your employer, your relatives, your friends, or even your neighbors could easily find out that you owe unpaid tax debt to the IRS. But embarrassment isn’t the only problem. If you have a federal lien on your property, you cannot sell without the government collecting the money they are owed. Tax liens act as an insurance policy for the government to guarantee that you will have to pay the debt one way or another.
If the IRS has threatened to place a lien on your home or car, you need to act immediately. Your first step should be selecting an experienced tax attorney to represent you in all dealings with IRS agents. A tax attorney will be able to explain your legal rights and help you explore options to pay off your debt and get the lien removed quickly so that you can move on with your life.
Selecting the right tax attorney is crucial if you want to successfully deal with IRS liens. Make sure that the attorney has the relevant experience. Even the best civil attorney will not have the background needed to deal with the IRS effectively. Instead, you want a legal team that has laser sharp focus and routinely deals with tax related issues to give you the best chance of success.
During your initial consultation with the attorney, take along all the correspondence you’ve had with the IRS thus far. Take copies of letters and collection notices along with your recent tax filings and financial records. As you start to go over your case, be upfront with your lawyer. If you don’t tell him the truth, how he can help you resolve the situation?
Make sure you choose a law firm that makes you feel at ease. Your attorney should be trustworthy and easy to talk to. This is the person that will represent you in all dealings with the IRS so you want to choose a lawyer that will work hard to get you the outcome you deserve.
Finally, be prepared for the process to take awhile to resolve. IRS tax liens can take months or even years to remove. Even after you settle your debt, your attorney will have to follow up to be sure the liens are lifted so that you don’t encounter problems in the future if you decide to sell your property.
The IRS files more than 500,000 tax liens on Americans each year. If you are facing a lien due to unpaid tax debt, contact a tax defense lawyer today!