Posted September 30, 2018
The Watson CPA Group offers tax help, audit assistance and tax representation for all types of taxpayers. Our specialized knowledge of IRS tax settlement and audit procedures means proper representation of your interests before the IRS or other taxing agencies -this is critical to your success. It is not only the things that are said or presented, but it is also the things that are not said or not presented. Oversharing during an audit or during IRS tax settlement negotiations can prove detrimental to your case.
Whether your needs for tax help and audit help are simple or complex, experience may be the deciding factor in your success. You probably wouldn’t climb Mt. Everest without an experienced guide, nor would you want to traverse the complex landscape of IRS rules alone. We can guide you every step of the way.
Our expert audit help begins with expert knowledge of the complex audit process. There are basically two types of audits: correspondence and field. Correspondence audits are simply mailed letters that the IRS sends to taxpayers requesting more information, adjusting tax returns, etc. 75% of all audits are done via the mail.
The other audit is in the field, or face to face interview which makes up the remaining 25% of all audits. The interview can take place in a variety of places- your local IRS office, your accountant’s office, your home or your place of business. Sorry, Starbuck’s and remote desert areas in Nevada are not acceptable audit locations. To keep the IRS out of your business office, you must demonstrate that it would be disruptive to your operation.
IRS audit rates are roughly 1% for those earning less than $200,000 annually and climb up to 12% for those earning more than $1M. S Corp owners face about a 0.4% audit risk, but over 67% of S Corp audits result in a substantial adjustment to the shareholder’s personal tax return. Here is a table from 2017 showing the percentage of tax returns file by income and the audit rates-
|Income||Percentage of Total Tax Returns Filed||Percentage of Tax Returns Audited|
|$1 – $24,999||36.47%||0.71%|
Yes, there are audit triggers. The IRS uses an array of algorithms that basically take past success of tax recovery and pit it against your tax return. For example, if their success rate is 75% on recovering 5% additional tax on travel expenses, and you have a lot of travel expenses, they will determine their Vegas-type odds to determine your worth. They simply weight the cost of enforcement against the expected benefit.
Fighting the IRS
When responding to the IRS, be prompt, be complete and don’t overshare. More importantly, get tax help and audit help from a qualified group of tax accountants. We pick the Watson CPA Group.
If you are chosen for a face to face, or field audit there are some rules of the road. Similar to correspondence audits, be complete and don’t overshare. Also, be courteous. IRS agents are fathers and mothers, and have lives outside of the enforcement world. Stay on point, but also understand that there might be some give and take. A good example is unsubstantiated mileage- if you are claiming 18,000 miles but the IRS agent is allowing you to claim 12,000 without a mileage log, you might want to count yourself lucky. The agent could easily disallow all the miles without an accurate record.
IRS Tax Settlement
There are all kinds of IRS tax settlement procedures, and you truly need the help of a tax accountant. There is fast-track mediation, there is the appeals process, there is tax court and there is also offers in compromise (OIC). Each has its place, and there are a sequence of events that must be adhered to.
Possibly wiping your tax debt slate clean at a significant discount is a matter of IRS discretion. No laws exist that govern taxpayer’s rights to reduce tax debt – wanting to make a deal isn’t enough. Certain criteria must be met before the IRS considers settling your tax debt. That said, the IRS must give equitable consideration to properly submitted offers in compromise (OIC). Simply put, your odds are better when you have experienced tax accountants by your side.
Our fee for IRS tax settlements, audit help and basic tax help is typically $500 to $750 as an initial retainer. Most cases can be resolved within this fee range with favorable results. Having said that, some tax help and audit help can be accomplished with just a phone call or letter. In these situations, our fee is $250.
However, if more time is involved or if we quickly discover that additional assistance is needed such as tax court and litigation, we will point you in the right direction of other trusted tax professionals. We know our limitations.
Power of Attorney
To properly work with the IRS on your IRS tax settlement or offers in compromise, we will need a signed Power of Attorney to efficiently act on your behalf. Any negotiated settlement of your tax debt will always be presented to you for your approval. But the process is better served if we can speak freely with taxing agencies about your tax debt case. Thanks again for your interest. We are your tax help experts!