First off – congratulations to the Kansas City Chiefs. From all accounts, it was a pretty epic game. And, of course, there are those commercials. Many great ones, but one quick note about one of, well, “professional interest” for me.
The TurboTax campaign (“Don’t do your taxes”).
You might not have seen them, but they are, in fact, BEAUTIFUL commercials (Intuit seems to have upped their design chops – which, when you’re a multi-billion, multinational conglomerate, they should be).
But let me ask you this: does it give you confidence to entrust your (increasingly complex) taxes to a nameless, faceless “CPA” cheaply employed by Intuit to work for them? It’s almost a worse pitch than entrusting it to a software program.
They’ve figured out that a “software” solution isn’t ideal for something so sensitive and delicate as your taxes … but their new answer seems to involve you trusting THEM to pick somebody for you. And it would be someone who isn’t competent enough to establish their own practice, and needs help from Intuit to do so.
It’s a bit of a scary proposition, yes?
And speaking of scary … for many, almost nothing is scarier than getting an audit notice from the big bad IRS.
Not scary for us here at U S Tax Solutions … but scary for normal Chattanooga folk. Truthfully, the total number of IRS audits has been on the low end of the spectrum the last ten years due to staffing and funding issues.
But… after Biden’s Inflation Reduction Act rolled out last summer, everyone’s been on high alert about increased enforcement measures (believe me, I heard from plenty of people worried about that) knowing that over half of the 80 billion dollar cash infusion to the IRS from said bill is allotted for that very thing.
So, is the newer cashed-up, staffed-up IRS going to come after your tax dollars with an army of enforcers? Well, sort of – but also, not exactly. Enforcement funds will go to many things like new technologies and increased legal support for IRS investigations and new staff hiring doesn’t mean just agents. But, yes, audits will increase.
Where those audits will focus has yet to be seen — Middle-class taxpayers? High-net worth individuals? Corporations? We’ll see…
But that’s why I’m talking today about preparing for an audit, to make sure you’re primed for whatever gets thrown your way and so you can be confident if that letter shows up in your mailbox.
Your first line of defense in the whole tax standing thing, is making sure things are done correctly the first time and getting it done on time. Though April is still a ways out, it’ll be here in a flash… which means you need to grab a time so we can get your tax filing signed, sealed, and submitted (and not by a randomly-selected drone). Let’s get something scheduled:
Alright, finally, let’s take a look at how to prepare for an audit…
How Chattanooga Filers Can Prepare for an IRS Audit
“The lucky man is he who knows how much to leave to chance.” – C.S. Forester
Some say IRS audits are on the rise for Chattanooga residents; some say they’re rarer than ever. The Government Accountability Office, one of Uncle Sam’s agencies that keeps watch over the IRS, recently reported that audit rates dropped a lot in the past decade.
But you might have heard (correctly) that the IRS got a big transfusion of funding last summer from Capitol Hill, and they’ve promised to use part of that money to beef up compliance — and for some people, that’s going to mean more audits.
The potential of an IRS audit is never something to take lightly.
Good question. Don’t panic.
An IRS audit can be random, picked by a computer. Other reasons include “significant inconsistencies” between your past tax returns and your most current one, miscalculated or weirdly high deductions, foreign accounts, or declaring a hobby as a business … to name a few.
The government generally has three years to pull your tax return for an IRS audit. Most — not all — are done completely by mail. Most are wrapped up inside a year.
Part of preparation is knowing as much as you can about what you’re getting into — and in this case, that starts with knowing how the IRS will and won’t contact you.
They generally use mail first (not social media or email, and not the phone). If somebody calls threatening you with an IRS audit and quick action if you don’t comply, hang up and call us, the police, or the IRS itself.
The IRS manages audits either by mail or through an in-person interview. In-person audits may be at an IRS office or at your home, place of business, or your tax preparer’s office. The IRS will give you contact info and instructions in the letter.
You’ll likely need your paystubs, W-2s, receipts and bills, credit card and bank statements, canceled checks, loan papers, medical and insurance records, plus your previous returns and all their records. This is a partial list, and some digital records might be okay. (Check with us if you have questions.) If you have too many books or records to mail, you can ask for a face-to-face audit.
Do not ignore the letter. The IRS isn’t going to evaporate, and your problem with them isn’t, either. Read the notice. Read it again. Make certain you know what they want of you.
Your best response depends on the type of audit. Mail-only audits, for instance, may mean you just need to collect the few items mentioned on the notice or pay/contest the amount owed. In-person audits may be tougher, requiring more documents and questions — an advocate experienced in tax (such as us) coming with you is also a great idea.
U S Tax Solutions specializes in Audit Representations! We’re always here, happy to be your advocate through every step of the process.
Looking out for you,
John and Wanda King