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San Jose, CA tax law attorney for IRS examinations

Many people have felt the sinking feeling that accompanies receiving a letter from the Internal Revenue Service (IRS). While it may be tempting to simply put the letter in a drawer and forget about it, ignoring the IRS can result in serious consequences. If you are contacted by the IRS and asked to make an office audit appointment, you should be sure to schedule the appointment, contact a tax lawyer for help if you need it, and attend the meeting. If you have already missed an audit meeting, you may wonder about the consequences you may face and what steps you can take to protect yourself.

Voluntary Appointments Versus Required Appointments

When the IRS examines a tax return and decides that the tax filer has misfiled, it may send a letter requesting an appointment. The tax filer may respond to the letter and schedule an appointment, or s/he may choose not to. If you have received a letter and did not schedule the appointment, the IRS has the authority to request a legal summons from a judge and demand that you attend it. If you fail to show up at an appointment that you personally scheduled, you will likely get the chance to reschedule the meeting without any major consequences. However if you were required to be at the appointment because of a legal summons and do not show up, the consequences will be much more serious.

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San Jose, CA IRS audit attorneyIf you have been informed that your tax returns will be examined, or audited, you may not know what to expect from the process. Often, taxpayers are upset about having to devote more time to their tax returns, and they may be worried about a larger tax liability or concerned that they will face penalties from the IRS.

All of these thoughts are well-founded. Hiring an attorney to look out for your best interests during the course of an examination is allowed under IRS rules and may help you keep your tax liability as low as possible.

How Is One Chosen for an Examination?

According to the IRS, there are two ways your tax return may be selected for an audit. The first way is by computer programs that find incorrect amounts on your returns when compared to documents like W-2s or 1099s. 

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virtual currency, virtual currency taxes, tax audit, IRS Compliance Campaign, San Jose tax audit attorneyThe Large Business & International (LB&I) division of the IRS has announced several new compliance campaigns that signal where the IRS will allocate its audit resources. If you are a business owner concerned about the ramifications of a tax audit, it is advisable that you contact a qualified business tax attorney who can give you customized legal support. 

What is an IRS Compliance Campaign? 

The LB&I division of the IRS creates compliance campaigns in an effort to keep taxpayer examinations centered on issues. These campaigns, which are rolled out periodically, are meant to zero in on areas that present the greatest risk of non-compliance.

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tax audit, San Jose tax audit attorney, tax lawyer, tax returns, DIF systemThe prospect of being audited by the IRS is rather frightening, and many taxpayers do not know what to expect in a potential tax audit. However, only around 1 percent of people who file taxes are audited, and there is a great deal of confusion about what makes an audit likely. When filing a tax return, it is important to understand what the IRS looks for when deciding who to audit.

The DIF System

The IRS uses automated scoring known as the Discriminant Information Function (DIF) System to analyze tax returns. This system compares people’s incomes in a geographic area and looks at factors such as family size, how income is earned, and real estate property values to find any discrepancies that may require an audit. The IRS also uses an Unreported Income DIF (UIDIF) score to analyze whether a person is likely to have any income that was not reported correctly.

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San Jose tax audit attorney, tax audits“You are being audited” are words no person or business wants to hear. Tax audits induce stress and tax professionals are usually needed. Often, taxpayers are concerned that they will discover a large tax obligation or that an audit will take up valuable time.

One of the most important steps you can take in the instance of being audited is to have all supporting documentation on hand. This requires keeping documents for the recommended period of time as well as having an organizational system for these records.

How Long Should I Keep Records?

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