Brotman Law Presents
The Ultimate Guide to IRS Audits
It is every small business owner’s worst nightmare … a notification from the IRS announces that they are going to be audited.
IRS audits have a lot of bad connotations, but on a very basic level they’re fairly simple. A government-appointed accounting agent visits you in order to review your finances and do a critical assessment of whether your tax return was filed correctly.
So how does something that sounds so simple become so complicated … and … so costly? An IRS audit is not something to be taken lightly, but with careful planning and expert assistance, they are definitely survivable.
What is the IRS looking for during an audit? Number one, they are looking for income not reported or income that was reported incorrectly. Number two, they want to see if any expenses and/or credits were not accounted for properly or taken inappropriately.
One thing to know about IRS auditors is that they have limited resources. People have scary visions of visits from fleets of IRS field reps who drop in on unsuspecting business owners, but that is not how it works. Unless the IRS believes it has a good chance of digging up (and collecting) a substantial amount of delinquent taxes, they will leave you alone.
Although this might ease your mind somewhat, IRS audits do occur and can be costly enough to put you out of business. When they happen, our firm, Brotman Law, specializes in helping small businesses succeed against the IRS.
We have a proven track record of representing clients in the areas of audits, IRS collections, sales tax, payroll tax and other related issues.
We want you to know if you are facing an IRS audit, you are not alone and there is help. The IRS has coffers to fill and will audit small businesses or individuals when they think there’s a chance of hitting pay dirt. We have successfully defended our small business clients in IRS audits and know how to handle the situation.
At one time or another, we have worked with most of the auditors in Southern California and know their game plans.
Our strategy is to go into an audit well-prepared and ready to mitigate any curveballs the IRS tries to throw your way. We know the keys to surviving an audit and coming out with the minimal (or no) liability.
This is what sets us apart from other law firms and why what we bring to the table surpasses what your CPA, tax preparer or even your CFO can provide. We fight it out with the IRS in the tax courts and win. We also know that the small business owner who thinks they can defend themselves against the IRS in an audit is more than likely in for a rude awakening.
That is why we created this free book. If you are reading this, the odds are pretty good that you have either received a notice from the IRS or believe that you are in the crosshairs.
If reading this out of plain curiosity, you will pick up some great tips and strategies for keeping your house in order. In this case, you will be well-prepared in case the IRS ever comes gunning for you.
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What's Included in This Guide?
The following is an overview and summary of the different chapters in The Ultimate Guide to IRS Audits.
The IRS Audit Process
In this introduction, we will discuss the overall IRS audit process, from the very onset to the receipt of the notice. You will understand how the IRS decides which tax returns to pursue and which ones they will not bother with. Lastly, we will stress the importance of responding to an audit notice from the IRS. Do not ignore it!
How Serious Is a Tax Audit?
This chapter will “talk you off the ledge.” We will discuss the three types of IRS audits and their degrees of severity. We will also talk about the cast of characters at the IRS who will be involved in the audit. This will give you a better understanding of what to expect and hopefully, calm your fears.
Why the IRS Audits Tax Returns
In Chapter 3, we will examine the real motivation for IRS audits. You will also learn what types of businesses are at highest risk of being audited. Employers should pay special attention to this chapter, especially if they use a lot of independent contractors.
What Is the IRS Process?
In this chapter, we delve into the real fundamentals of the audit. We will talk about what type of documentation the auditor will request and why it is important to present this information as neatly and concisely as possible. We also stress the importance of you, the taxpayer, maintaining the control of the audit — not the other way around.
How Do You Get Selected for a Tax Audit?
Chapter 5 answers the burning question, “Why me?” You will learn about the two scores the IRS assigns to a return to determine whether it is worth auditing. We also identify the four high-risk categories that trigger audits — especially the self-employed.
Should I Represent Myself in an Audit?
This is never a good idea and this chapter explains why. The IRS is too powerful and has too many weapons at its disposal for you to go up against alone. This chapter also stresses the importance of consulting with an experienced tax professional to represent you in an audit.
Hiring a Tax Attorney to Represent You in an IRS Audit
This chapter specifically addresses working with Brotman Law and our vast experience in dealing with the IRS. We will answer questions about our strategy, and most importantly, how much it could potentially cost. It is important to keep in mind that in the long run, the money you spend on representation could be considerably less than what you would end up paying the IRS.
How to Appeal an IRS Audit
If you do not agree with the audit findings, Chapter 8 is full of advice on what to do. First, you can try to work it out with the auditor. If that does not work, then you can move on to Appeals. The last step is taking your case to tax court and we explain each step of this process so you will know what to expect.
IRS Reconsiderations – How to Get the IRS to Reconsider a Tax Assessment
While it is a long shot, you could get the IRS to reconsider your tax assessment. In this chapter, we will look at the types of assessments the IRS might look at, but keep in mind that it has to be NEW information. This chapter also talks about how your odds will increase if you pursue a reconsideration under the guidance of an experienced tax attorney.
Frequently Asked Questions About IRS Audits
Chapter 10 answers the questions we most frequently receive from taxpayers:
What Happens If I Owe Money to the IRS After the Audit?
What Happens If I Get Audited and Don’t Have Receipts?
If I Get Audited, What Is the Likelihood I Will Get Audited Again?
… and more.
IRS Audit Strategy: Seeing the Playing Field
When facing an audit, it is important to see the big picture. This chapter will address audit strategies that will keep you one step ahead of the auditor. We also have pointers on how to beat the IRS at its own game. Lastly, we will review steps you can take if you do not agree with the outcome of the audit.
IRS Audit Red Flags – Why IRS Audits Occur
This is a must-read chapter because we clearly spell out the red flags that trigger an IRS audit. These can range from simple errors on the return to massive overseas transactions. Caught in the middle are the self-employed, meals, travel and entertainment expenses and the list goes on.
Thank you in advance for reading “The Ultimate Guide to IRS Audits.” It was a labor of love and our law firm welcomes all questions, comments, concerns, and feedback that you may have about this free resource.