Our Enrolled Agents (EAs) are licensed to practice before the Internal Revenue Service (IRS). To receive this credential, a professional prepare must pass a four part, two day exam demonstrating thorough knowledge of the tax code. This credential allows an “Enrolled Agent” to represent taxpayers before all administrative levels of the Internal Revenue Service. Our EAs are members of The National Association of Enrolled Agents, a member organization of and for Enrolled Agents. The principal concern of the Association and its members is honest, intelligent and ethical representation of the financial position of taxpayers before governmental agencies. Members of NAEA are required to complete a minimum of 30 hours of continuing professional education each year in the interpretation, application and administration of federal and state tax laws in order to maintain membership in the organization. This requirement surpasses the IRS’ required minimum of 16 hours per year.
IRS audits are up and the IRS Commissioner has promised Congress he will continue to increase enforcement. There has been steady increase in the number of audits for several years now, and with our country’s debt situation, the increases are likely to intensify in the future. While your chances of being audited are still quite small, enforcement is the cornerstone of every commissioner’s administration. The number of Levies issued has also surged, and the Non-Filer Division is receiving increased funding and manpower in an effort to close the enormous tax gap (the difference between reported taxable income and unreported income).
Will you be audited?
Here are some of the IRS selection criteria that may put you at higher risk.
- A very high dollar amount for a single tax deduction.
- The size of your deduction in relation to your income.
- As your income increases, so do your chances of an audit. Tax payers earning $100,000 or more are far more likely to be audited than taxpayers earning less.
- The type of deduction should fit your circumstances. The IRS doesn’t expect a farmer to have high entertainment expenses, or a truck driver to have high office expenses.
- If you have a complex return and prepare it yourself, you have a higher risk of audit than if the return is signed by a professional tax preparer.
- Self-employed individuals are audited more frequently than employed individuals earning the same income.
- Itemized deductions are audited twice as often as the standard deduction.
- Tax Protests. If you write on your return that you are protesting the filing because of a number of common protests, your are pretty much guaranteed an audit.
What should you do if you receive a letter from the IRS?
The absolutely first thing you should do is contact your tax preparer. Even if you self-prepare your return, you should keep the name of a competent preparer on hand. Unless you are skilled at dealing with the IRS, you should seek professional help from the very first correspondence. Never ignore a notice. The IRS does not go away and the problem will only get worse.
Let us read your letter.
It is unfortunate that it often takes a professional to interpret what information an IRS notice is requesting. Most IRS notices require a letter response in IRS terminology with attached documents proving your right to the deduction. We can tell you what proof is needed and where to find it. Audits most often take place at the IRS office. A professional preparer can help you organize your documents for the audit. An Enrolled Agent can even take your place at the audit table! We strongly recommend you go to work and let our professionals go to the audit. Telling the IRS too much information or what you think the agent wants to hear will not help your case.
In the event the audit does not go well and you still think you were entitled to a disallowed deduction, our EA’s can file an Appeal for you and continue to represent your case through the Appeals procedure.
If the IRS letter is a bill for money you know you owe but cannot afford to pay, contact us to arrange a Payment Plan.