Audit

Every year taxpayers are required to file a tax return. This tax return reports to the Internal Revenue Service what your income was for the previous year and sets forth your own calculation of the taxes you owe. This self-made calculation of your taxes is called “self-assessment.”

As inconvenient as it is for all of us to have to file a return year in and year out, taking precious time out of our already busy days, the Internal Revenue Service is actually giving us an opportunity by allowing us to file our own returns. The reason for this is because we get to tell the Internal Revenue Service how much we think our bill should be, and it is the Internal Revenue Service's burden to prove otherwise.

This self-assessment income tax system is drastically better than alternative systems, like the property tax system, in which our local government appraises our homes without our permission, and as a result assesses additional property taxes. Under this type of system, the burden falls on the homeowner to prove the local government was wrong in its assessment. We’d much rather self-assess our property taxes if we were given the opportunity.

Nevertheless, the self-assessment income tax system of the Internal Revenue Service comes with one major caveat: the IRS is not required to agree with your self-assessment. When the Internal Revenue Service does not agree with your assessment, the Internal Revenue Service may choose to conduct what is called an audit, or as the Internal Revenue Service refers to it, an “examination.”

Audit, There are three types the Internal Revenue Service can conduct:

• Correspondence Audits: This is the most common type, comprising around 80% of all Internal Revenue Service audits. In this type of audit, the Internal Revenue Service will send you a certified letter notifying you of the audit and request additional information from you to determine if your tax return was accurate. It is called a Correspondence Audit simply because the audit is conducted via correspondence – meaning, through the mail or phone. You never have to meet the auditor in person, and you will typically not have to speak to them over the phone if you don’t want to.
• Office Audits: In this audit, you will be notified via mail. But unfortunately, you will be required to go to your local Internal Revenue Service office and be audited in person. Luckily, you can send a representative in your place.
• Field Audits: Again, you will be notified by mail, but this time the Internal Revenue Service agent will come to your home or business. The Internal Revenue Service may choose this type if, among other reasons, it believes you are hiding assets, and will visit your home or business to look for visual evidence.

No audit should be taken lightly, and you need to be prepared.

 Fortunately, you have the right to legal representation for any of the audit types. An Experienced Dallas tax attorney Andrew Margolies can represent you, alleviating much stress and headache. Also, there is a good chance you will get a better result by hiring legal representation than would otherwise result by handling it yourself.