Audit Representation FAQ

Audit Representation FAQs

What is an “egg shell” audit?
An eggshell audit is a civil audit in which the return(s) under examination contain a material understatement of income, material overstatement of deductions or credits were claimed that the taxpayer...
What is a reverse “egg shell” Audit?
Reverse egg shell audits are parallel and simultaneous civil and criminal investigations where essentially a criminal tax investigation is disguised as a civil audit. Reverse eggshell audits usually stem from...
Why is a reverse “egg shell audit so dangerous for a taxpayer?
Because of recent changes in IRS internal policy, parallel investigations are on the rise and are rapidly becoming a favorite tool of the IRS. The advantages to the government in...
What are the warning signs to look for in determining if there has been a criminal referral and therefor an egg shell audit has reversed into a reverse egg shell audit?
A criminal referral is likely to follow a civil audit if firm indications of fraud exist in the mind of the civil auditor. Common indications of fraud, often called “badges...
What are effective criminal tax defense counsel’s goals in an egg shell audit?
In the typical eggshell audit criminal tax defense counsel seeks to avert the emergence of a criminal investigation, by attempting to prevent a client from making any criminal admissions. In...
What are the possible outcomes of an egg shell audit?
There are generally three possible outcomes for egg shell audits; 1. The Revenue Agent does not consider the misstatements found and adjustments made during the audit to be caused by...
Do I have the right to know why I was selected for examination?
Section 3503 of the IRS Restructuring and Reform Act of 1998 (RRA 98) requires the publication of the general criteria and procedures for selecting taxpayers for examination. If a taxpayer...
What can I do to prepare for an audit?
Be organized and able to support each figure on your return. Since you will be required to substantiate each figure on a return, it is imperative that you are organized...
What is an IRS “civil examination”?
These examinations can take various forms, and it typically depends upon the taxpayer and the complexity of one’s tax return. One form is the “campus examination,” which is basically a...
How does the IRS decide which tax returns are selected for an audit?
This is common question. Recently the IRS was discovered to have illegally “targeted” certain politically conservative groups that were applying for tax-exempt status. If a political group had a “conservative...
I disagree with the IRS’s audit conclusions. What are my appeal options?
After an audit, the taxpayer has basically three options: (i) appeal the matter before an IRS supervisory conference with the auditor’s manager, (ii) appeal within the IRS administrative system, or...
What are the basic “taxpayer rights” when one’s tax return is selected for audit?
When the IRS engages in discussions during audit with the taxpayer, the taxpayer is afforded certain rights. For example: (i) the taxpayer retains the right to receive professional and courteous...
What options are available to me where I am unable to pay a deficiency, penalties and interest at the conclusion of an audit?
Offer in Compromise It may be possible to negotiate an “Offer in Compromise” agreement with the taxing authority. An Offer in Compromise is a procedure where you approach a taxing...
What is the significance of receiving a 30 day and 90 day letter following an audit?
Within a few weeks after the conclusion of a tax audit you will receive a package with: A letter (known as a 30-day letter) notifying you of your right to appeal the...
What is involved with appealing disagreements, both within the IRS and before the courts?
Where you disagree with the findings of an IRS examiner, you may request a meeting with the examiner’s manager. If after doing so, you still are unable to reach an...
What rights do I have where I disagree with the auditor’s findings at the conclusion of an audit?
At the conclusion of an audit you’ll be presented with a report explaining the proposed changes and any penalties and interests that are potentially due related to the proposed changes....
I have been audited several times in the recent past. Is there anyway to stop the IRS from repeatedly auditing me?
The IRS ordinarily attempts to avoid repeat examinations of the same items, but sometimes this happens, especially where the Service successfully assesses additional income tax with each additional examination. However,...
Can I have the examination transferred to another area?
Ordinarily, your return will be examined in the geographical area where you live. However, if an argument can be made that your return could be examined more efficiently and conveniently...
Can I record the IRS interview with the IRS revenue agent and is it a good idea to do so?
You have the right to record an examination interview. If you choose to do so, your request to record the interview must be made at least 10 days in advance...
If the IRS discovers an error in a tax year under audit, will they look at other tax years? How many years worth of returns are at risk during an audit?
Ordinarily, the IRS limits the scope of a potential audit to within three years from the most recent return’s due date or file date, whichever is later. However, this limitation...
What are the most common reasons the IRS decides to conduct an audit? What are they commonly looking for in an audit?
Three quarters of all returns are selected for audit based upon the return’s computerized DIF score. A DIF score comes from the taxing authority’s often highly secretive computerized rating system,...
Is there anything I can do to decrease the odds of subsequent negative consequences stemming from an in-person interview with a taxing authority?
Keep your answers short and refrain from elaborating on any answer unless asked to do so. Do not answer questions you were not asked and do not try to anticipate...
Do I have to submit to being interviewed by the taxing authority directly?
An audit notice is one of the most feared letters any citizen can receive in the mail. If there’s one thing that scares the average American, it’s the specter of...
Are all audits the same or do they come in different flavors?
An audit is a procedure used by a taxing authority to assemble pertinent information about your tax return and to make a determination if the information you included on the...
What should I do if I suspect that the IRS may be considering criminally investigating me?
If you suspect that you are under criminal investigation by a taxing authority, do not speak freely with any representative of the taxing authority without first securing legal advice. Misreported...
What will happen if I do not respond to the taxing authorities audit notice?
Failure to respond to an audit notice in the best case scenario will lead to additional fines and penalties being added onto the final liability owed. If left unchecked, an...
What rights do I have during an audit?
Under the law, every individual or business under going an audit is afforded a number of protections and rights as a taxpayer. However, don’t be deceived into thinking that because of...
What is the largest risk you expose yourself to if you choose to attend an audit without proper representation?
If you choose to attend an audit without proper representation, you may slip and make emotional rather than rational statements under the emotions of helplessness, irritation, aggravation, and anxiety brought...
What is the most common audit technique applied by the taxing authorities?
Governmental auditors are all taught to “take it to cash”. Commonly auditors will begin an audit by first assuring themselves they have identified all of the business, personal, checking, savings...
What is the worst that can happen if I choose to represent myself in an audit?
Two statements routinely come to mind when I am asked this question, “He who is his own lawyer has a fool for a client” and “going into an audit without...
Why should I hire an attorney rather than any other type of tax professional to represent me in an audit before the IRS, Franchise Tax Board or State Board of Equalization?
Superior litigation and advocacy skillsDue to their specialized training in law, tax attorneys are simply in the best position to advise and defend individuals or businesses. Attorneys bring to the...
Why should I hire The Tax Law Office of David W. Klasing to represent me in an audit before the IRS, Franchise Tax Board or State Board of Equalization?
To begin with you must understand that the optimal result after undergoing an audit is a finding of “No Change” by a taxing authority which will result in no additional...
How are the 4 goals and outcomes 1 and 2 (delineated above) best obtained?
Taxpayers facing an egg shell audit should only be represented by experienced criminal tax defense counsel and the CPAs who perform via a Kovel agreement (United States v. Kovel, 296...

 

 

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