IRVINE,
Calif., May 16, 2024 /PRNewswire/ --
An Internal Revenue Service (IRS) audit is a formal
investigation of a taxpayer's financial information. These can be
performed on both individuals and businesses alike. During an
audit, IRS agents will carefully review pertinent financial
transactions to determine the accuracy of a particular return.
As of 2023, the IRS has announced a new initiative to perform a
greater number of "enhanced audits" on wealthy individuals.
Specifically, the agency is targeting those who earn over
$1 million annually and those with
tax debts exceeding $250,000. This
new initiative is supported by a recent funding boost and the
expansion of compliance programs that focus on investigating large
partnerships.
If you need to resolve a tax-related legal issue, get help from
our experienced Dual-Licensed Tax Lawyers & CPAs by calling the
Tax Law Offices of David W. Klasing
at (800) 681-1295 or click here to schedule a reduced rate initial
consultation online.
Enhanced IRS Audits Target Wealthier Taxpayers
After a recent funding boost bolstered their audit capabilities,
the IRS has announced a new initiative targeting taxpayers with
high incomes and large tax debts. This initiative is intended to
promote tax compliance, especially among the wealthy.
Who is Being Targeted?
Specifically, the IRS' enhanced audits are aimed at taxpayers
with incomes over $1 million and
taxpayers with debts greater than $250,000. The IRS has reiterated that this
initiative is not meant to burden working-class people.
Expansion of the Large Partnership Compliance
Program
Compliance programs are set forth by tax authorities like the
IRS to help ensure that taxpayers fulfill their obligations. As
part of its new initiative, the IRS has announced the expansion of
the Large Partnership Compliance program. This program focuses on
examining large partnerships with assets of at least $10 billion each. It will receive a significant
staffing increase that may allow the program to combat tax
fraud more effectively. Appropriate cases where
fraud is detected or merely suspected will be
forwarded to the IRS criminal investigation division whose mission
is to criminally prosecute those committing tax crimes for the
deterrent effect.
Motivations
The IRS targets wealthy taxpayers for multiple reasons.
First, audits of wealthy people will often yield higher returns
on investment compared to audits of working-class citizens. There
are often multiple people who will spend hours working on any
particular audit. These people want to see a significant reward for
the hours they put in.
Furthermore, wealthy taxpayers are often involved in more
complex financial endeavors that create opportunities for tax
evasion. By auditing the wealthy, the IRS believes they are more
likely to uncover complicated tax fraud schemes.
In many cases, wealthy individuals will neglect their tax
obligations because of simple mistakes. Our Dual-Licensed Tax
Lawyers & CPAs can help you remedy these mistakes and ensure
that they are not construed as intentional attempts at tax evasion.
We will work diligently to protect your interests and defend
against / avoid accusations of tax crimes.
Why Are People Audited by the IRS?
No one wants to see an audit letter from the IRS in their
mailbox. Such a letter can strike fear into the heart of any
taxpayer. While some audits are random, many are triggered by
certain signals of misconduct.
Random Audits
Random audits can help the IRS gather data and potentially
improve its audit selection methods. These random audits target
taxpayers by chance as part of a routine selection process.
Errors on Tax Returns
Tax returns that contain errors or inconsistencies are likely to
be flagged for IRS audits. Some examples of common errors include
missing information and discrepancies between reported income and
information reported by third parties like financial institutions.
Also, returns that report abnormally high income for their
applicable industries may be flagged.
Whistleblower Tips
Furthermore, some audits may be performed after the IRS receives
tips from whistleblowers. Whistleblowers report suspected tax
fraud and other illegal activities to the government.
For example, a corporation's disgruntled employee may report
suspected tax evasion schemes to the IRS. Similarly, a
whistleblower tip may come from a former business partner.
High-Income Individuals
As previously mentioned, some individuals and businesses are
targeted for IRS audits merely because they are wealthy.
High-income earners may have more opportunities to engage in tax
evasion schemes. Furthermore, audits of these taxpayers are more
likely to result in the recovery of a large tax debt.
Past Audit History
Lastly, some taxpayers are audited because of their past audit
history. Those who have had prior issues with the IRS may be more
likely to be investigated again. Moreover, the penalties for
repeated non-compliance can be especially severe.
Potential Consequences of Tax Evasion
Cheating on your taxes can get you in serious trouble. There are
multiple potential consequences that you may face.
First, you can face criminal charges for tax evasion. If found
guilty, then you may face significant fines and other penalties. If
the charges levied against you are especially serious, then you may
even face imprisonment. Typically, prison terms are ordinarily
assessed in cases where defendants cause at least $30,000 tax loss which equates to one year in
jail under the federal sentencing guidelines, are repeat offenders,
or are engaged in other criminal activities.
Also, you may have your assets seized. Tax authorities have the
power to seize property from taxpayers to satisfy outstanding tax
debts. Some common examples of property that may be seized include
vehicles, real estate, and bank accounts.
Finally, you may face significant reputational damage in the
wake of a tax evasion charge. This reputational damage may affect
your ability to maintain social relationships, secure housing, and
stay employed or cost you your professional licensing if your
profession has a moral character requirement.
How Does the IRS Audit Process Work?
The IRS audit process begins when the IRS selects a tax return
for examination. The taxpayer then receives a notification letter
that outlines the details of the audit and what records need to be
provided.
During the audit, the IRS reviews the taxpayer's financial
information to ensure that their returns are accurate. Once the
investigation is complete, the IRS will tell you what they found.
Their findings could result in no changes, adjustments to your tax
return, or the assessment of penalties.
Contact Our Lawyers for Help with Your Tax Problems
If you have failed to file a tax return for one or more years or
have taken a position on a tax return that could not be supported
upon an IRS or state tax authority audit, eggshell audit, reverse
eggshell audit, or criminal tax investigation, it is in your best
interest to contact an experienced tax defense attorney to
determine your best route back into federal or state tax compliance
without facing criminal prosecution.
Note: As long as a taxpayer that has willfully committed
tax crimes (potentially including non-filed foreign
information returns coupled with affirmative evasion of U.S. income
tax on offshore income) self-reports the tax
fraud (including a pattern of non-filed returns)
through a domestic or offshore voluntary
disclosure before the IRS has started an audit or criminal
tax investigation / prosecution, the taxpayer can ordinarily be
successfully brought back into tax compliance and receive a
nearly guaranteed pass on criminal tax prosecution and
simultaneously often receive a break on the civil penalties that
would otherwise apply.
It is imperative that you hire an experienced and
reputable criminal tax defense attorney to take you through
the voluntary disclosure process. Only an Attorney has
the Attorney Client Privilege and Work Product
Privileges that will prevent the very professional that you
hire from being potentially being forced to become a witness
against you, especially where they prepared the returns that
need to be amended, in a subsequent criminal tax audit,
investigation or prosecution.
Moreover, only an Attorney can enter you into a voluntary
disclosure without engaging in the unauthorized practice of
law (a crime in itself). Only an Attorney trained in Criminal
Tax Defense fully understands the risks and rewards involved in
voluntary disclosures and how to protect you if you do not qualify
for a voluntary disclosure.
As uniquely qualified and extensively experienced Criminal Tax
Defense Tax Attorneys, Kovel CPAs and EAs, our firm provides a
one stop shop to efficiently achieve the optimal and predictable
results that simultaneously protect your liberty and your net
worth. See our Testimonials to see what our
clients have to say about us!
We Are Here for You
Regardless of your business or estate needs, the professionals
at the Tax Law Offices of David W.
Klasing are here for you. We are open for business and our
team will help ensure that your business is too. Contact the Law
Offices of David W. Klasing today to
discuss your business with one of our professionals.
In addition to our fully staffed main office in downtown
Irvine California, the Tax
Law Offices of David W. Klasing has
unstaffed (conference room only) California based satellite offices
in Los Angeles, San Bernardino, Santa Barbara, Panorama City, Oxnard, San
Diego, Bakersfield,
San Jose, San Francisco, Oakland, Carlsbad, Sacramento. We also have unstaffed (conference
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Mexico, Austin Texas,
Washington DC, Miami Florida and New York New York that solely handle
Federal & California Tax issues.
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schedule a reduced rate initial consultation via
GoToMeeting follow this link. Call our office and request a
GoToMeeting if you are an existing client. We also now offer
a convenient scheduling option, where you can secure David W.
Klasing, Esq M.S.-Tax CPA's undivided attention for a 4-hour
consultation at any of his satellite offices.
See our Audit Representation Q and A
Library
Public Contact: Dave Klasing Esq.
M.S.-Tax CPA, dave@taxesqcpa.net
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