An IRS audit can be a stressful and overwhelming experience for any taxpayer. The IRS has the authority to review your financial records and tax returns to ensure compliance with tax laws. If the IRS finds any discrepancies or errors, you could be facing fines, penalties, and even criminal charges.
One of the most important things to keep in mind during an IRS audit is that the IRS will be reviewing your financial records and tax returns to ensure that you’ve reported all of your income and that you’ve claimed the correct deductions and credits. The IRS will also be looking for any signs of fraud or tax evasion.
In addition, the IRS will also be looking for adequate documentation to support your claims. Adequate documentation includes receipts, invoices, bank statements, and other records that support your income, expenses, and deductions. If you don’t have adequate documentation, the IRS can disallow your deductions, which can result in additional taxes, fines, and penalties.
The penalties for not having proper substantiation can be severe. The IRS can assess penalties for failure to file a tax return, failure to pay taxes, and for underreporting income. The penalty for failure to file a tax return is typically 5% of the unpaid tax for each month or part of a month that a return is late, up to a maximum of 25%. In addition, you may be subject to a penalty of up to 25% of the unpaid tax for failure to pay the taxes on time.
This is where hiring a professional tax resolution firm can be beneficial. A professional tax resolution firm can help you navigate the complex regulations surrounding tax laws and ensure that you’re reporting your income and deductions correctly. They can also help you gather and organize the necessary documentation to support your claims, which can help you avoid penalties and fines.
A professional tax resolution firm can also help you negotiate with the IRS and work out a resolution if there are any discrepancies or errors found. They can also help you appeal any decisions made by the IRS and represent you in court if necessary.
In conclusion, an IRS audit can be a stressful and overwhelming experience, but hiring a professional tax resolution firm can help you navigate the process and ensure that you’re in compliance with tax laws. They can help you gather and organize the necessary documentation, negotiate with the IRS, and represent you in court if necessary. It’s important to have professional help to avoid penalties and fines and also to get the best possible outcome in the audit.