Finding out that your tax returns are under audit can be stressful. Perhaps you’re wondering how the audit came about or whether mistakes were made with your taxes that will lead to penalties. There may be a worry that receipts weren’t saved for deductions. It is understandable to be anxious when you receive notifications that your return has been selected for audit. At Birk Law Firm, our IRS tax audit lawyer Kelvin Birk is passionate about easing your mind when it comes to a tax audit for your business.
IRS Tax Audit Types
There are generally four types of tax audits for a business. Each of these varies in complexity and requires different methods of resolving the issues. Tax audit attorneys can help with the following types of audits:
Considered the most common audit, this type will result in your receiving a letter from the IRS requesting documentation or proof that will help verify information reported on your tax return. It’s likely you would get this type if you contribute to several charitable entities.
This audit is a face-to-face consultation with an auditor. They typically come to your attorney’s office and discuss the details of your tax return.
An office audit takes place at the tax auditor’s office and usually occurs if several issues are found on your tax return. Peculiar transactions, for instance, can result in this type of audit.
Taxpayer Compliance Measurement Program Audits
This type is one of the rarer audits and means that the auditor will examine each event and item in your life that could influence your taxable income. It will likely require you to show your marriage license, birth certificate or other personal documents. The goal here is to confirm that all the paperwork you provided is actually yours.
Missouri Tax Audit Attorney Explains the Tax Audit Process
If you’ve received a letter from the state of Missouri saying that you’ve been selected for an audit, it might strike fear and worry in your mind. Below is a list of common questions you might have after the initial shock wears off.
How Are Businesses Chosen to Be Audited?
The U.S. Department of Revenue (“Department”) identifies, tracks and evaluates taxpayers who are potentially at risk of underreporting or underpaying sales, use, corporate or withholding taxes.
How Will I Find Out If My Business Has Been Selected to Be Audited?
An auditor from the Department contacts businesses by telephone or by letter. A discussion will follow about audit periods, accounting records, sampling the accounting records and where the audit will take place once initial contact has been established. Discussions may take place over the phone or face to face. Some companies maintain their accounting records electronically, which is recognized by the Field Compliance Bureau. You can significantly reduce the audit time at your business location if any of the records can be provided electronically on a compact disk or similar media. Providing records in electronic format also reduces sampling risks and increases audit accuracy.
Does My Attorney Need to Be Present at the Audit?
Although the Department of Revenue does require you to submit a power of attorney form signed by your lawyer for tax audit in order to discuss the matter with a third party, it is not a requirement to have an attorney present during the audit.
How Long Can I Expect the Auditors to Be at My Business?
It depends on a number of factors, including the size of your business, the type of industry, and the condition and complexity of your accounting records. The auditor of a medium-sized company typically spends one week examining records for a sales/use tax audit. The auditor will allow you time to gather additional information, if necessary, after examining the records. There will be follow-up meetings to discuss the overall progress and preliminary conclusions. Typically, an auditor spends one day examining records for a corporate tax audit. If more than one company is audited, the audit time may be extended. Audits are typically conducted by the Department of Revenue on your business premises, although there may be other options available. The tax auditor may conduct the audit remotely, using electronic data you provide, or on-site, using information you provide.
Why Do Tax Auditors Examine Federal Income Returns?
In order to reconcile the gross sales between the sales tax return, the federal income tax return, and the sales recorded in your accounting records, a sales tax auditor will review your federal income tax return. During the audit period, the depreciation schedule is examined to determine if any fixed assets were sold or purchased.
Who Should I Call If I Have Concerns Regarding The Audit?
Any initial questions or concerns should be communicated with your assigned auditor. If you have further questions, the auditor’s supervisor or manager should be contacted.
Our IRS Tax Audit Attorney Also Specializes In Forensic Accounting
Forensic accounting services generally involve specialized knowledge and investigative skills used by CPAs to gather, analyze and evaluate documentation. They are also used to interpret and communicate the findings before a court, board or other venue. Simply put, forensic means that it is appropriate for use in a court of law in the context of litigation.
Benefits of Forensic Accounting
Those who could benefit from the use of forensic accounting include but are not limited to clients with the following types of cases:
Resolving Marital and Family Disputes
In the context of family and marriage, there are two main forms of fraud. One is when an individual uses a relationship — such as marriage — with another person in order to steal money from them. A second type is when people hide money that they are not legally allowed to hide from their spouses or families. Although fraud committed within families or marriages is generally much smaller than fraud committed within businesses, and especially large corporations, it can still cause great financial damage for a person.
Detecting Tax Fraud
Tax fraud occurs when a business or individual makes false claims about their finances, resulting in less or no tax being paid. There are many things a person or business can do that are considered tax fraud, such as claiming false deductions, claiming that their personal expenses are business expenses, using a false Social Security number or not reporting income accurately. The commission of any of these things or anything else that qualifies as tax fraud is considered a felony.
Exposing False Claims for Insurance
Insurance fraud has existed as long as insurance has existed. People will file false claims in order to receive monetary benefits when they file a claim so that they do not have to face the problem. It is common for people to file claims for things that are hard to disprove, like stolen cars, minor car accidents, staged fires and commercial liability fraud.
Identifying Bankruptcy Losses
A forensic accountant can be useful even if fraud is not taking place. Forensic accountants often help businesses or individuals recover from major economic setbacks, or even bankruptcy. Forensic accountants are trained to investigate what went wrong, determine whether there was foul play and help companies and individuals develop new strategies for avoiding similar mistakes in the future. In addition, forensic accountants can be helpful when a business or individual holds themself responsible for an economic setback and needs to prove that they followed all rules and regulations.
Exactly What Is a CPA?
In short, you can think of a CPA (Certified Public Accountant) as a trusted financial advisor who helps individuals, businesses and other organizations plan and accomplish their financial goals. CPAs can assist clients with their goals whether they are saving for a new house, opening a new office, or planning a multibillion-dollar merger.
Kelvin Birk is not only a Missouri tax audit lawyer, but he is also a Certified Public Accountant with more than 30 years of experience in accounting and tax and business consulting and more than 20 years of experience in numerous legal matters.
What Are My Rights in a Tax Audit?
As a taxpayer, it’s important that you remember you are entitled to certain rights in a tax audit. Those rights include the following:
- IRS employees must treat their customers professionally and courteously.
- Customers have a right to privacy and confidentiality regarding tax matters.
- You have a right to understand why the IRS wants information, how it will use it, and what will happen if the IRS does not receive it.
- You have the right to be represented by yourself or a representative authorized by you.
- It is possible to appeal disagreements with the Internal Revenue Service as well as in court.
Get Personalized Service From Our Tax Audit Attorney in Missouri
If you live in the Cape Girardeau area and learn that you have been selected for an audit by the IRS or a state tax agency, it’s not unusual to be scared. But, even though the thought of a tax audit may seem terrifying, a lawyer for a tax audit can help you achieve the best outcome possible. Tax attorney Kelvin Birk is highly skilled in understanding what tax officials are looking for in audits and how to negotiate effective results for clients. Feel free to reach out to his office at 573-332-8585 for a free consultation regarding your IRS or other tax audit.
ALL YOUR LEGAL NEEDS
Why Choose Birk Law?
Birk Law Firm is a small firm by choice that is big on client services. Attorney Kelvin Birk and his team are responsive to their clients’ needs. When we sign on as your law firm, you can count on us for strong legal counsel, from negotiations to settlement to trial.
Our clients benefit from the intertwining of Kelvin Birk’s legal and CPA background and experience. We provide well-rounded advice to solve both legal and financial issues and to come up with creative solutions. We use modern technology to deliver legal services in a more efficient and client-focused manner than was previously possible.
We provide personalized and compassionate service. We believe that each client’s matter is the most important matter in the world to them, and we strive to treat it that way.