By: Lance Wallach
IRS audits are going to increase tremendously this year. They will also increase in the future. The IRS will specifically be targeting small business owners and high-income individuals and professionals. If you are a small business owner and operate as a sole practitioner, or as an S corporation, you will probably be audited. Small business owners who operate as C corporations are less likely to be audited. Most IRS agents do not like to work hard. It is very easy to beat the IRS at the audit game. You need to have good records and an accountant who has lots of experience fighting audits. I suggest using a former IRS agent who was with the IRS for at least 20 years. Even though most IRS agents tend not to be hard workers, 20 years gives him enough experience to know the ways of the IRS. A lot of my friends still work for the IRS and I always hear good stories about audits.
Beware of someone whose fee is based on a percentage of how much you save in taxes. Or who promises to get you a significantly higher refund than anyone else can. People like these are likely to prepare outrageous returns that will land you deep in trouble with the IRS.
Just because the IRS says you owe money doesn’t mean that’s correct. The agency makes mistakes - plenty of them, even computing penalties and interest.
Having a smart, well-prepared tax expert on your side can be a tremendous advantage. Not only will they know the ins and outs of the tax code, but also they can take over the often-exhausting job of dealing with the IRS – and help you decide how far to push the fight.
If you feel you have a bulletproof case but are getting nowhere with an auditor, stay calm – and consider asking to speak to that person’s manager. If that doesn’t help either, consider taking your case to an IRS appeals office. An IRS publication says, “most differences” between taxpayers and the IRS that reach the appeals level are settled. For details see IRS publication 556.
You may also consider taking your case to the IRS Taxpayer Advocate Service, or TAS, an organization within the IRS created to help taxpayers resolve problems, as well as advocate for changes within the system.
You may be eligible for help if you have tried to resolve your tax problems through normal IRS channels and haven’t gotten anywhere, or if you believe and IRS procedure isn’t working, as it should, such as an amended return that hasn’t been processed, as advocate spokesperson says.
If you are facing a financial crisis and have no hope of repaying everything you owe, consider asking the IRS to settle for some lesser amount.
Specifically, IRS employees “will be permitted to consider a taxpayer’s current income and potential for future income when negotiating an offer in compromise,” the IRS said. “Normally, the standard practice is to judge earnings in prior years.”
Lance Wallach, the National Society of Accountants Speaker of the Year, a member of the AICPA faculty of teaching professionals, is a frequent speaker on retirement plans, financial and estate planning, and abusive tax shelters. He writes about 412(i), 419, and captive insurance plans. He speaks at more than ten conventions annually, writes for over fifty publications, is quoted regularly in the press and has been featured on television and radio financial talk shows including NBC, National Public Radio’s All Things Considered, and others. Lance has written numerous books including Protecting Clients from Fraud, Incompetence and Scams published by John Wiley and Sons, Bisk Education’s CPA’s Guide to Life Insurance and Federal Estate and Gift Taxation, as well as AICPA best-selling books, including Avoiding Circular 230 Malpractice Traps and Common Abusive Small Business Hot Spots. He does expert witness testimony and has never lost a case. Contact him at 516.938.5007, wallachinc@gmail.com or visit www.taxadvisorexperts.org
Question. How many taxpayers have you represented with respect to IRS audits of 419 welfare benefit plans?
ReplyDeleteAnswer. In the past 7 years, my Firm has represented more than 500 taxpayers who have been audited with respect to their participation in single and multiple employer welfare benefit plans. We have represented and currently represent taxpayers before the IRS Examination and Appeals Offices and have cases pending in the United States Tax Court.
Question. Do you represent taxpayers who have participated in different welfare benefit plans?
Answer. Yes. We have knowledge of many different welfare benefit plans and experience in representing taxpayers who participate in those plans before the IRS. A sampling of the plans that we know well include:
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