The IRS Audit Blog

Posts Tagged ‘IRS Audit’

Question: I have a few questions concerning U.S taxes and the IRS:?

1. I own three small business, what is my appoximate chance of being audited by the irs in any given year? percentage please, if you can.
2. If I am audited by the IRS, will they only look at my income or will they also look at the amount of money in my bank?
3. I am also trying to sell a few cars, for a grand total of about 150,000. Will depositing this much in, say, a wire transfer (not cash), get the banks/IRS suspition? I ask this because I know the IRS (if reported to), is suspicious of cash deposits in excess of 10km, due to anti- money laundering laws, and while I am not planning to klaunder money, I ABSOLUTELY CANNOT have my businesses audited this year.

Thanks!

Answer: 1. I own three small business, what is my approximate chance of being audited by the irs in any given year? percentage please, if you can.

The IRS audits business at random as well as statistical data reporting. If your business reports data that is higher than statistically normal for that particular business you may get audited. Also, the IRS selects business returns at random to audit. Examination of personal returns has been around 1% for the past 4 years. The percentage is higher for the higher income levels, up to 7% for returns over $1Million. For Small Corporate returns under $10Million in assets has been just under 1%. Subchapter S and partnership returns examined have been just under .5%

2. If I am audited by the IRS, will they only look at my income or will they also look at the amount of money in my bank?

The IRS conducts 3 basic types of examinations. Depending on the type of examination, the IRS requests different information. For a Field exam, they will look at your entire set of books and records, including all bank statements.

Types of Examinations: 1. Correspondence, 2. IRS Office,3. Field Exams (taxpayer’s home or taxpayer’s business location)

3. I am also trying to sell a few cars, for a grand total of about 150,000. Will depositing this much in, say, a wire transfer (not cash), get the banks/IRS suspicion? I ask this because I know the IRS (if reported to), is suspicious of cash deposits in excess of 10km, due to anti- money laundering laws, and while I am not planning to klaunder money, I ABSOLUTELY CANNOT have my businesses audited this year.

There are no guarantees to ensure your return won’t get audited. The IRS selects returns at random every year as well as selecting returns based on statistical data reporting. The Treasury Department requires the Bank to file a form for any $10k deposit. This is a Treasury Department Regulation and not an IRS one. The IRS requires taxpayer’s to declare amounts in foreign accounts or recipients of foreign trust, regardless of the amount, on their tax returns

Alliant Insurance Services Launches Online Program Designed to Improve Corporate Governance of Healthcare Organizations

Developed by Alliant Healthcare Solutions and Kalorama Partners, BoardWise Program Kicks Off With Online Webinar Series April 5-19

Tax Problem Fixers Inc

Question: I refiled my taxes with the assistance of an attorney. I only $448. But they still say I owe 38Gs on 70Gs.?

I have sent this paperwork to the IRS. They have taken my returns consistently since the audit in 2005 and again this year. Can I get my money back?
Rephrase: In 1999, I file my own taxes on a 1040ez form. I wasn’t familiar with how to report my stock option earnings at the time. In addition, the company I worked for lumped all earnings into one W2 – the total earnings for that year was 70,000. Base wage + Stock Options. Taxes were automatically taken out when I cashed in the options. However, my filing gave the IRS the impression that I had additional earnings. In 2005 I was audited due to a mistake on my return. The result was – I owed 42, 000 in taxes in 1999. I refiled with the assistance of a CPA / Tax Attorney.
The result was that I only owed 440.00 in taxes for 1999. My attorney submitted the appropriate tax forms in 2006. This year I received a letter that my stimulus and tax return was taken again for 1999. Which now states I only owe $38,000

Answer: Okay, new sequence.

You exercised (and sold?) stock options in 1999. These were NSOs where the spread is included in the W-2 in box 1, after which, your basis in the stock was the FMV on the day you got the stock. If you resold the stock the same day, your capital gain would have been ZERO.

Unfortunately, you didn’t file a schedule D showing the sale of the stock until recently. Without knowing your basis, the IRS used $0 and taxed you not only on the spread, but the ENTIRE FMV of the stock.

This caused you to appear to have considerably more income. With the under-reporting statute being 6 years, you could get hit with tax (say 35%), an accuracy penalty (20%-25%) and interest. This could easily cause you to owe $38K if the FMV had been, say $60K.

When you refiled, the tax return had to be sent to the statute group. They had to verify that your return was still within statute and how much of the additional tax had been incurred/paid in the previous 24 months. This adds weeks to the 1040X process, which was already 8-12 weeks to begin with. If you did this recently, there hasn’t been time to process it.

So…in the meantime, the IRS thinks you still owe and it’s still grabbing refunds. When the dust settles, if you were able to show enough paperwork to show it was in fact a same day sale of an NSO, you’ll be okay and the excess refunds will be returned to you.

Intuit TurboTax Home & Business: Comprehensive Help for Sole-Proprietor Taxes

TurboTax Home & Business’s attention to detail and excellent data-import features make it the package of choice for sole proprietors with complex tax situations, but it’s expensive and it might be overkill for some sole Schedule C filers.

Prepaid Legal Services

Question: If I don’t get this resolved, I might have a nervous breakdown.?

My husband and I have been using this lady to do our taxes for 5 yrs now. Recently we were audited. She told us to sign power of attorney papers that will allow her to deal with all of our tax concerns. We did. We sent her our 2007 tax info. a couple months ago, and now we can’t get ahold of her!! She lives a couple hours away, and we’ve been calling her every single day, leaving a message asking her to return our calls, and she never does! I’ve sent 2 certified letters to her with our concerns. She signs for them, but never gets in touch with us. We are really freaking out, because the tax deadline is coming up, we still have this audit that we’re trying to deal with, and if she is our power of attorney with everything, then that means she’s now receiving documents from the IRS that are ours, right? What should we do?

Answer: Contact IRS and ask if documents and letters have been sent to her instead of you. Look at your copy of last year’s return and get the preparer’s ID #. Record every time you attempt contact, use your phone bills etc. Keep the paperwork from the post office. Next I would get a consultation with an attorney. Most are free for the initial consultation. This will give you a better idea of how to deal with this person. Your taxes may be under control and she is really swamped at this time of year, but it it inexcusable not to return a call. Oh, find another tax person or do your own from now on.
Is it possible that you owe her money?

IRS Reveals New Offshore Voluntary Disclosure Initiative for 2011

The IRS has revealed a new offshore voluntary disclosure initiative for 2011, and tax attorney William D. Hartsock, Esq. and his legal/accounting staff are on the forefront of the new changes.

Battle Hymn of the IRS

Question: can you file taxes extra late?

I haven’t filed taxes since 04 maybe 05, I’m looking to file them this coming tax season but I have a couple concerns. 1st am I eligible for obama reparations. 2nd will filing late result in any penalties like interest, audit, or something similar. 3rd will filing late result in any benefits like tax refund or are they void after that current year. 4th A main reason I haven’t filed is because I don’t know where 25% of my financial documents and pay stubs are, 1 of which being circuit city which is no longer operating. Is there any way I or the IRS can retrieve these for me? What would you do in my situation?

Answer: You can file late. If you have a refund, there will be no penalty. File your returns.

Atmel Reports Fourth Quarter and Full Year 2010 Financial Results

SAN JOSE, Calif., Feb. 8, 2011 /PRNewswire/ — Atmel® Corporation (Nasdaq: ATML), a leader in microcontroller and touch solutions, today announced financial results for the fourth quarter and full year ended December 31, 2010. Revenues for the fourth quarter of 2010 were $457.8 million, a 3% increase compared to $444.3 million for the third quarter of 2010, and a 33% increase compared to $343.6 …

Owe Unpaid Employment Taxes or Delinquent Payroll Taxes?

Bruce charity’s tax returns show years of omissions

Bruce charity’s tax returns show years of omissions – Douglas Bruce, a candidate for the Colorado Spring

Now More Than Ever – Part 2.avi