How to Survive Tax and IRS Audits

216915-Mehdiyoun-2I receive many calls from individuals and business owners who are being audited by the IRS or by Maryland, Virginia or Washington D.C. tax authorities. The audits could be for income taxes, corporate taxes, payroll taxes or sales taxes. Unfortunately, many taxpayers decide to go it alone when they are initially contacted by the IRS auditors. During the audit meeting their lack of knowledge about tax audit procedures costs them dearly. They reveal financial information that they didn’t need to, they try to conceal information that the IRS or Maryland, Virginia and Washington D.C. auditors know already or fail to meet deadlines for appeal consideration. Each of those mistakes may cause thousands and sometimes hundreds of thousands of dollars in higher tax bills.

For example, if you fail to make a timely request for appeal, you will lose your appeal rights and your only remedy may be costly and uncertain litigation in tax court. Many issues that come up during a tax or IRS audit are technical issues and require intimate knowledge of tax law and procedures.

A frequent issue for businesses that get an IRS audit letter is business expenses. IRS usually argues that certain business expenses are not properly deducted. Businesses may also face a sales tax audit. Many business owners don’t know whether the goods and services they provide are subject to sales taxes. Simply assuming that they are not, can be a very costly mistake. One of my clients started his landscaping business in Washington D.C. many years ago and never collected sales tax because he simply assumed landscaping services was not subject to sales tax in Washington D.C.  Almost ten years later he was audited by the District of Columbia Office of Tax & Revenue and faced a $400,000 sales tax bill plus interest and penalties.

During an audit the IRS or Maryland, Virginia and Washington D.C. Tax Auditors will want to inspect your financial records such as invoices, bank statements, receipts, etc. The auditors will then compare those records with the information you provided on your tax returns.

Handling a tax or IRS audit is a very delicate process. Missteps are very costly and some individuals or businesses never recover from the consequences of such avoidable mistakes. My strong advice is to contact a competent Maryland tax lawyer or a knowledgeable Virginia or Washington IRS attorney  as soon as you learn about the audit. I have helped hundreds of taxpayers by representing them before the IRS or Maryland, Virginia and Washington D.C. tax auditors. My practice is focused on tax controversy, tax disputes, tax settlements, back taxes and tax audit representation. I am a Columbia University graduate and in addition to a Juris Doctor degree I have advanced degrees in tax law from Georgetown University Law School. Please visit my website www.mytaxlawfirm.com to learn how I can assist you in your tax matter. You may also call me at (240) 499-8333.