The IRS will send you out a notice informing you your tax return for a certain year is being examined.
Philadelphia, PA (PRWEB) October 15, 2012
On September 10, 2012, Dale S. Goldberg sat down with Internet radio program host, Bert Martinez of “Money for Lunch.” Goldberg was featured on the program in order to discuss IRS audits.
To hear the interview, please visit http://www.moneyforlunch.com and click on September 10th. The interview is approximately an hour long and delves into such topics as: audits, fiscal responsibility and more.
How do consumers know they're being audited?
According to Philadelphia CPA, Dale Goldberg,
"The IRS will send out a notice informing consumers about their tax return for a certain year that is being examined. There are different types of audits. There’s what is called a correspondence audit- which is usually the IRS has matched information via a consumer's 1099...or consumers can get an office audit, which is where they meet with the IRS as well as meet with the examiner while bringing certain requested documentation. And then lastly, there’s a field audit where the IRS will come to a consumer's home or business; and it is generally when a consumer has a business over a certain amount that they’ll come in."
What causes and individual or a business to get audited? What are some of the red flags to look for?
There are 4 ways someone can get selected for an IRS exam. These are:
1) Matching- IRS will collect 1099s and other documents under a consumer's social security number. If, for some reason, they find that a consumer is not listing everything, they may try to send out a bill for the missing items, OR they may try inform the consumer that they are going to re-examine the return for the missing items.
2) DIF Score- Also known as the ‘discriminate function score’, this is the most common method for selecting tax returns. Computers look at your losses and deductions based on a consumer's income and other factors, and they score the return. What they are looking at are national and regional averages of what someone in the consumer's income bracket makes. If a consumer scores high on it (i.e. Too many deductions or losses were taken), then there is a good chance of getting audited.
3) Other People (aka: “Whistleblowers”)- Another way that consumers can get audited is if someone else reports their finances to the IRS. For instance, disgruntled exes, etc. can call up the IRS or fill out and send in a 3949A form. And sometimes, the informant can get paid if the IRS does, in fact, find out that you are hiding any money!
4) Random Audit- While this is, in fact, completely random, it is also the most rigorous form of auditing because the IRS looks at EVERYTHING and they then take that information and use it as a basis for future auditing methods, including setting up that DIF score, etc.
What do you do if you disagree with the IRS audit?
1) Explain your position and why you disagree with the examiner.
2) Request to meet with the agent’s manager.
3) Do a “Fast Track Appeal”, which is a conference in which an IRS specialist listens to both sides and seeks a resolution. This is a good alternative versus going to court. **These are usually pretty effective because the IRS doesn’t want to see a small matter taken to court, which could cost the IRS more money in the long run.
Avoid an audit by:
-Make sure that you’ve reported all of your income accurately.
-Make sure that your deductions and losses are in order by using a CPA.
While Goldberg believes that the IRS is there to help consumers work out a solution to issues surrounding their finances and reported income, he also agrees that the IRS can be tough, demanding that you pay back any monies that you may owe. Therefore, it is in your best interest (especially if you are a new homeowner, small business startup or just an individual with a complex tax return) to hire a CPA. Having a CPA assist you with your tax filing can help you avoid many of the pitfalls that result when your income is improperly reported.
About Dale S. Goldberg:
Dale S. Goldberg is a certified public accountant (CPA) with an MBA from Temple University. He is also the founder of Dale S. Goldberg, CPA & Associates, located in Philadelphia, Pennsylvania. Goldberg has spoken before the IRS and SBA and is considered an expert in the field of taxation.
Call Dale S. Goldberg, CPA & Associates today at (215) 342.4200 to discover the many benefits that they can offer regarding accounting in Philadelphia.
Providing personal attention and 25+ years of accounting experience.
About Dale S. Goldberg, CPA & Associates:
Dale S. Goldberg, CPA & Associates is a well established, full service accounting firm based out of Philadelphia, PA. From individuals with complicated tax situations to small businesses and large corporations, Dale S. Goldberg, CPA & Associates assists their clients with all of their tax and accounting needs no matter what the situation or circumstance.
About Money for Lunch:
Money for Lunch features a talk radio program that provides entertaining and informative business and lifestyle programming to a nationwide listeners, 5 days a week.