No one likes getting a notice from the IRS, unless it is a sizeable tax refund check. The fear of an audit has become a bugaboo for American taxpayers. Why is this? One obvious explanation is that audits are rather rare. Only about 1.1 percent of all tax filers were audited by the Internal Revenue Service last year. That's around 1.6 million people. And of those, almost a third of the audits were performed on Earned Income Tax Credit (EITC) claims, which come from low-income wage earners.
The IRS is also unpredictable. They have three different types of audits that are open to them. The most popular and inexpensive option is to simply send a letter. Also known as a correspondence audit, these missives tell the taxpayer that he needs to send in proof of a deduction or tax credit, or goes straight for the jugular and simply tells the taxpayer that the IRS changed his return and he now owes more money, due immediately. Most people who receive these types of notices don't even realize they are being audited. It would be different if the taxpayer was told to contact a specific IRS agent, but these correspondence audits are all handled through snail mail.
More traditionally, the IRS may schedule a desk or office audit of a person or a business. In this instance, the taxpayer travels to his local IRS office and presents financial records. Walking into a desk or office audit unprepared and unaware of the limits of the audit can lead to the IRS agent gaining full access to the taxpayer's finances. The problem is that IRS auditors are really good at finding what they are looking for.
The third and final type of IRS audit is arguably the scariest. A field audit gives an agent the option of simply showing up at your doorstep and asking to see your financial records. More often than not, they will actually make an appointment. But unannounced visits are not uncommon.
What is an audit?
As scary as they may be, an IRS audit is typically not a criminal accusation. These investigations are conducted because the IRS believes a taxpayer either made errors or intentionally cheated on his tax returns. In the end, they simply want to collect the money they think you owe them.
If a taxpayer ends up owing money at the end of an IRS audit, it becomes a tax debt. The IRS agent will always try to collect as much money as he possibly can. It is his job to exhort the taxpayer to pay what the IRS thinks he owes them.
Why you need tax settlement help
The IRS is not your friend! Even if a smiling agent comes to your home and compliments your décor, he is, in fact, still working with the best interests of the government at heart. An IRS agent knows that you don't know the U.S. tax code nearly as well as he does, and he will use that fact to urge you to pay as much as you possibly can. Your best defense against this is to learn everything in the Internal Revenue Manual or to hire an experienced tax resolution services company.
You should never participate in an audit (even one that takes place using the mail system), no matter where it takes place, without proper tax representation. After examining your finances, tax situation, and IRS debt, a talented tax advisor will help you figure out how to pay. These arrangements often involve payment plans with manageable monthly installments. It is important to note, however, that if you miss even a single installment, the IRS may levy your bank account for the total amount due and begin the process toward aggressive collections actions.
The IRS is also unpredictable. They have three different types of audits that are open to them. The most popular and inexpensive option is to simply send a letter. Also known as a correspondence audit, these missives tell the taxpayer that he needs to send in proof of a deduction or tax credit, or goes straight for the jugular and simply tells the taxpayer that the IRS changed his return and he now owes more money, due immediately. Most people who receive these types of notices don't even realize they are being audited. It would be different if the taxpayer was told to contact a specific IRS agent, but these correspondence audits are all handled through snail mail.
More traditionally, the IRS may schedule a desk or office audit of a person or a business. In this instance, the taxpayer travels to his local IRS office and presents financial records. Walking into a desk or office audit unprepared and unaware of the limits of the audit can lead to the IRS agent gaining full access to the taxpayer's finances. The problem is that IRS auditors are really good at finding what they are looking for.
The third and final type of IRS audit is arguably the scariest. A field audit gives an agent the option of simply showing up at your doorstep and asking to see your financial records. More often than not, they will actually make an appointment. But unannounced visits are not uncommon.
What is an audit?
As scary as they may be, an IRS audit is typically not a criminal accusation. These investigations are conducted because the IRS believes a taxpayer either made errors or intentionally cheated on his tax returns. In the end, they simply want to collect the money they think you owe them.
If a taxpayer ends up owing money at the end of an IRS audit, it becomes a tax debt. The IRS agent will always try to collect as much money as he possibly can. It is his job to exhort the taxpayer to pay what the IRS thinks he owes them.
Why you need tax settlement help
The IRS is not your friend! Even if a smiling agent comes to your home and compliments your décor, he is, in fact, still working with the best interests of the government at heart. An IRS agent knows that you don't know the U.S. tax code nearly as well as he does, and he will use that fact to urge you to pay as much as you possibly can. Your best defense against this is to learn everything in the Internal Revenue Manual or to hire an experienced tax resolution services company.
You should never participate in an audit (even one that takes place using the mail system), no matter where it takes place, without proper tax representation. After examining your finances, tax situation, and IRS debt, a talented tax advisor will help you figure out how to pay. These arrangements often involve payment plans with manageable monthly installments. It is important to note, however, that if you miss even a single installment, the IRS may levy your bank account for the total amount due and begin the process toward aggressive collections actions.
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