About IRS Audits

An audit is an official review of a taxpayer’s finances by the Internal Revenue Service (IRS) to verify the accuracy of their tax return. The IRS notes that most audits occur within two years after you file, but they can happen any time within three years of the filing deadline. During an audit, taxpayers must provide documentation that supports certain deductions and expenses they have claimed on their taxes and answer any questions the auditor may have. Depending on the extent of the review they deem necessary, the IRS may conduct a full or limited audit. They may also do it in person or by mail. 

A full audit is a complete review of the taxpayer’s financial information and records. The auditor will look through each item on the tax return in detail. In contrast, limited audits focus on specific items or deductions only. Regardless of the type of audit, the IRS informs the taxpayer of the process and what information is needed for it. They will send a written letter or notice to the address provided on the tax return. If you receive such a letter, you have until the date indicated to respond.

How Likely Are You to Get Audited and the Bottom Line

The likelihood of being audited depends on several factors, including income and occupation. Generally speaking, the more money one earns, the higher their chances of being subjected to an audit. In addition, taxpayers who are self-employed or own businesses are more likely to receive a letter from the IRS. But the overall number of audits is very low. Only 0.38% of all individual income tax returns were audited in 2022, with the majority being correspondence audits.

The bottom line is that most taxpayers will never have to worry about an IRS audit. However, as a responsible taxpayer, it’s wise to prepare for the possibility and educate yourself on the process. At Nesso Tax, we can provide the necessary guidance and advice to help you through it. Remember that an audit doesn’t necessarily mean you’ve done something wrong; it means that the IRS needs more information to guarantee you comply with their regulations. You’ll have the best chance of a successful outcome if you work with qualified tax experts like us.

The Appeal System

When an audit concludes, a potential outcome is that the auditor will disagree with the taxpayer and find them liable for additional taxes or penalties. The taxpayer may appeal the decision by filing a small case request or formal protest in these cases.

Small Case Request

A small case request is appropriate if the taxes, penalties, and interest total for each tax period involved is $25,000 or less. The total amount includes the proposed increase or decrease in taxes, penalties, or claimed refunds. To file a small case request, the taxpayer must submit Form 12203 and a written statement explaining why they disagree with the auditor’s findings. They must do this within 30 days of receiving the notice of the proposed changes.

Formal Protest

A formal protest is a right choice if the taxpayer disagrees with the proposed modifications and the total amount is more than $25,000. The taxpayer must provide more information, such as legal arguments, financial statements, and documents to support their case. Still, the time limit for filing is typically 30 days from the date of the letter.

The appeal system is a formal process in which you can challenge the IRS’s findings. It starts with the IRS Office of Appeals, a separate entity from the auditing division. The office will assign a representative to review the case and listen to your arguments. They will also explain their position. The goal is to reach an agreement without going to court, as it would be more time-consuming and expensive. In most cases, the Office of Appeals overturns or at least modifies the auditor’s findings. But if the parties disagree again, you may appeal to the Tax Court, a trial-like setting before a judge.

Advantages of Appealing an Audit

While the appeal process may seem intimidating, there are significant advantages to challenging an audit. Here are some of the most important ones:

It Can Reduce Financial Penalties

One of the most significant disadvantages of an audit is the financial impact of errors and non-compliance. Appealing an audit can reduce financial penalties by providing evidence of the company’s best effort to adhere to regulations and to show a willingness to undertake corrective measures. While the appeal itself may be costly, it might be less expensive than the financial penalties imposed due to audit findings.

It Can Improve Understanding of the Rules

The appeal process also allows you to understand better the IRS regulations and how they apply to your circumstances. This is particularly true if you have an experienced tax specialist representing you; they will be more familiar with the law and its implications. These insights can help increase your compliance from now on, which reduces future risk of audits or penalties.

It Can Avoid a Courtroom Dispute

If you appeal an audit, there’s a good chance that you can resolve your case through mediation or negotiation before it goes to court. As we mentioned, going to court is expensive. It’s also a stressful experience that can disrupt the business and your personal life. Avoiding court is always preferable, as it allows you to spend more resources on other business-related tasks.

It Delays Payment of the Amount at Issue

An additional benefit of appealing an audit is that it can delay the payment of taxes. If the audit concluded with increased taxes owed, you’d have to pay the amount within a certain period. However, you can also file an appeal, and the payment will be postponed until the process ends; this might give you more time to raise funds or negotiate a payment plan with the IRS.

You Don’t Have to Go Through It Alone

Finally, while you can file an appeal independently, you can also work with an IRS-certified representative. These CPAs and enrolled agents will help you navigate the process more efficiently, provide legal and financial advice, and negotiate with the corresponding authorities. When looking for the best IRS audit representation in Plantsville, CT, Nesso Tax is your go-to partner. We’re here to protect your rights and ensure fair representation throughout every step.

What Our Services Include – How We Can Help

Contesting IRS Findings

We can help you contest IRS findings and negotiate a better settlement. Our team comprises highly-experienced CPAs with extensive knowledge of the tax code, allowing us to protect your interests and challenge any unjust decision.

Filing Court Petition

If we can’t reach an agreement during the audit, we’ll file a petition in court on your behalf. We have the resources to prove your case and lower the risk of heavy fines or other penalties.

Document Identification

To mount a successful defense, having all the required documents is essential. We can identify and obtain the necessary paperwork and prepare it according to the court’s requirements.

Audit Presentation

When you’re in front of an auditor, the quality of your presentation can be the difference between a fair settlement and an unfavorable outcome. Our team can help you design and execute an effective communication strategy highlighting your arguments.

Why Choose the Nesso Group? Our Values

As part of the Nesso Group, we don’t just offer financial solutions. We genuinely care about our clients and want to share the core values guiding our work with them. These include the following:

• Be Excited to be Here: Be aware of the energy you bring.
• Be a Good Steward: Care for all that is entrusted to you.
• Be Supportive and Positive: Connect and be part of the team.
• Be Servant-Minded: Serve people with empathy.
• Be Humble and Genuine: Encourage and strengthen those around you.
• Be Passionate to Grow: Contribute to a culture of continuous improvement.

Get In Touch with Financial Planners in Plantsville for IRS Representation

At Nesso Tax, we offer comprehensive tax services in Plantsville, CT. We can assist with any issue related to IRS representation, including audits, appeals, court petitions, and more. Every aspect of your case is handled with skill and expertise when you choose us as your trusted partner. We’ll work around the clock to ensure excellence and customer satisfaction. Contact the Nesso Group today for professional guidance and superior services.