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IRS Audit Q&A
 
IRS Audits, Common Questions and Answers:


  
IF AUDITED, DO I HAVE TO BE AT THE MEETING WITH THE IRS?
No! You have the right to have someone represent you. As your CPA, I would have you sign Form 2848, Power Of Attorney, authorizing me to represent you before the Internal Revenue Service. As a matter of fact, I highly recommend that my clients do not meet with the IRS at all.
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ARE TAX RETURNS RANDOMLY AUDITED BY THE IRS?
The IRS uses two methods to select tax returns for audit. With the first method, the IRS reviews and assigns a score to all tax returns. If your tax return has a score over a certain level it is manually reviewed. If, after this review, certain criteria are met the return is selected for audit.

The second method is based on targeted programs or perceived area of abuse. If you are in a certain profession or business or if you file a certain type of form as a part of your tax return, your return could be selected for an audit.

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DO RANDOM IRS AUDITS ALWAYS RESULT IN A MEETING WITH THE TAXPAYER OR TAX PREPARER?
No. The IRS has been selecting returns for audit at their service center. They send the taxpayer a letter stating that they have disallowed deductions and the taxpayer should either pay the additional tax due or send in substantiation for the deductions. Unfortunately, this is all done through the mail without any personal contact. I believe this is unfair, and that a taxpayer should be informed of the audit and have a chance to respond before receiving a bill for additional taxes due.
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WHAT CAN BE DONE TO MINIMIZE THE RISK OF IRS TAX AUDIT?
Have me prepare your tax returns. Proper presentation and accurate tax returns go a long way to minimize audit risk. I have over 30 years experience, have prepared over 10,000 income tax returns and have an audit rate well below the actual rate of returns audited.
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HOW DO I GET OUT OF GOING TO AN IRS AUDIT?
Upon receipt of the IRS notice of audit, CALL ME (even if we did not prepare your returns). I will prepare the Power of Attorney Form. I will meet with you to gather the information the IRS is looking for. I prepare the information to make the audit go as smoothly as possible. I will meet the auditor and report back with the results. Sometimes additional information is required. I will provide the information and make sure the auditor has everything they need to complete the audit.
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SHOULD I WORRY ABOUT BEING AUDITED?
No. The IRS audits a very small percentage of all returns filed. If your return is prepared properly, the risk of audit is reduced.
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WHAT'S INVOLVED WITH A TYPICAL IRS TAX AUDIT?
The IRS typically questions deductions taken on your tax return. Providing proof of the deduction is what is necessary to satisfy the auditor. Sometimes the IRS has a record of more income than shows up on your tax return. You need to be able to prove that the income isn’t yours, or that you have accounted for it properly.
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CAN USING ANY ACCOUNTANT MINIMIZE MY RISK OF AN IRS AUDIT?
I have seen cases of tax preparers making up deductions and creating tax returns that are completely inaccurate. Their clients usually receive unusually large refunds. The clients are happy, until the IRS steps in and audits all of the preparers clients. Be careful. If your refund seems to good to be true, your preparer could be exaggerating your deductions. You are responsible for your tax returns. Make sure you trust your preparer. Review your tax returns.
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Leonard A. Grey, Certified Public Accountant, Professional Corporation
31731 Northwestern Highway , Suite 166W , Farmington Hills, MI 48334-1654
Phone: (248) 538-6340, Fax: (248) 538-6341

 

 

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