Sacramento tax audit attorney Jin Kim represents individuals and businesses under audit by the IRS and the State of California. She helps clients respond to correspondence audits, represent clients at office and field audits, and resolve assessed interest and penalties through appeals and tax resolution strategies. To learn more about how tax audit attorney Jin Kim can help you navigate your audit and mitigate tax liability, call her office at (916) 299-9913 for a free consultation.
About IRS Tax Audits & Examinations
The IRS is the government branch that is dedicated to examining taxes and if you’ve filed them correctly. Most people receive an audit notice at least once in their lives, and some people, like business owners, have a particularly high chance of being audited more than once. That being said, the term audit is actually a misnomer at this point. The proper term used by the IRS is ‘examination,’ and IRS agents assigned to audit you are actually called examiners. There are also three different types of audits. The type you get will depend on the complexity of the issues you’re faced with as well as your own personal circumstances.
If you’ve been selected for a correspondence audit, you can breathe – for a while, that is. Correspondence audits are reported to be the most common of the three types of IRS audits. The idea behind it is simple. The audit is done through correspondence, which is usually through registered mail. The auditor will send a letter detailing the issues, and you will be asked to provide an explanation or records, which you will send through the mail again. The IRS examiner will then examine the documents and either accept or reject them, along with an explanation. You might also be required to provide additional documents if they’re not convinced.
It’s still a hectic process, but it’s relatively laid back compared to office and field audits. There’s still the risk of being levied additional taxes or civil penalties, but at least you wouldn’t have to go to an office and meet with the auditor. The downside, of course, is that it may feel like the audit is being dragged out too long – compared to an office or field office, that is.
An important tip if you’re undergoing correspondence audits – never send original copies of documents. You’ll never see them again. Make photocopies and send them instead.
This is the standard meet-and-greet with the auditor type of audit that most of us are familiar with. Office audits can be nerve-wracking. The disadvantage of office audits is that you’re on display for the examiner to see – and they’ll take full advantage of this. For example, it’s a common tactic for examiners to stay silent to prompt the other person into saying something to fill the silence. Sometimes, people end up incriminating themselves. The examiner will observe your movements and reactions, so it’s important to stay cool and calm, even if you feel anything but.
Staying quiet when you’re not prompted to say anything is another good tactic to avoid saying something you weren’t meant to divulge. Bring only the necessary documents. Try and be polite to the examiner – it never hurts.
Field audits are usually reserved for businesses, companies, partnerships, or trusts – taxpayers considered ‘big fish’ by the IRS. It’s because these taxpayers have a greater chance of misreporting or underreporting their taxes to earn more. For this reason, the IRS finds it necessary to be the one to go to the taxpayer’s place of business. A visit will allow them to have all the necessary records in one place – avoiding delaying tactics. Plus, the IRS examiner might be able to talk to employees or customers to fetter out any hidden mischief on the owner’s part.
If you’re up for a field audit, we highly suggest engaging the services of a tax professional. There will be complex issues involved, and since there’s more at stake, you’d want to cover any possible liability. If anything, it’s worth it for the peace of mind alone.