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Audits Archives

VIDEO: Common tax issues faced by individuals and businesses

Many individuals come to our firm for assistance handling tax issues after being audited by the IRS. They may need help proving that the tax return they filed was correct, or they may need help arranging an installment agreement, an offer in compromise, or another alternative if they don't dispute that they owe the tax.

Individual Taxpayers can Obtain Transcripts During IRS Shutdown; Practitioners Cannot

Despite most lights being out at the IRS, taxpayers can still receive some services at the IRS. Crucial to many tax professionals are the IRS Transcripts of Account. Since it is an automated process, taxpayers can still use automated tools, such as IRS.gov, to request that a transcript of their personal tax records be sent to their address of record; the taxpayer will typically receive transcripts in the mail within five to 10 calendar days. Transcript requests by third parties cannot be processed at this time.

From Al Capone to Barry Bonds, the IRS has played a critical role initiating investigations that ultimately led to criminal prosecution.

Despite accusations that the notorious Capone was guilty of directing or committing many crimes through his organized syndication,  tax evasion was ultimately the offense the federal government pursued which resulted in Capone's sentence to federal prison in 1932.  Flash forward 80 years and we see a conviction against Barry Bonds for obstruction of justice, which originally began as an IRS investigation into a company that distributed steroids and other performance enhancing drugs to determine whether the distributor laundered the proceeds gained by selling those drugs.  On September 14, 2013, the United States Court of Appeals for the Ninth Circuit affirmed Bonds' conviction for obstruction of justice under the omnibus clause of 18 USC, Section 1503, the interpretations of which will apply to tax obstructions under 26 USC Section 7212(a).  Click here for United States v. Bonds, 2013 U.S. App. LEXIS 19007 (9th Cir. 2013) http://cdn.ca9.uscourts.gov/datastore/opinions/2013/09/13/11-10669.pdf.

California audits: IRS may not be in compliance with Tax Code

California taxpayers may be interested to know that the Treasury Inspector General for Tax Administration (TIGTA) recently released its annual report on whether the IRS is in compliance with Section 6501(c)(4)(B) of the Tax Code. The IRS is supposed to give taxpayers and their representatives notice that they can decline an extension of the statute of limitations. In the alternative, the Code section also allows the taxpayer to make a request as to the length of any extension and the issues it may cover. When TIGTA reviewed 51 IRS audits, it found that this Code section had not been adhered to by IRS employees.

Will California taxpayers see fewer audits?

By now, most everyone in California has heard about the scandals facing the IRS. Since the story first broke, there have been changes in leadership and the IRS remains under a microscope. As a result, rumors are circulating that there will be fewer audits conducted and when an audit does happen, it will be "kinder and gentler" than in the past.

Small businesses in California have a high risk for tax audits

It may not surprise anyone that the IRS has developed a software application to help them identify people that may be cheating on their taxes. According to some, this program has indicated that small businesses have a tendency to cheat on their taxes at a higher rate than most. Many of those small businesses that end up being subjected to audits are said to be located in California.

Which common deduction triggers California tax audits?

For many California residents, tax time is stressful. Aside from the hassle of going through receipts and worries that there could be missed deductions, many fear that they will be subjected to tax audits as a result of their return. While there are a number of issues that can trigger a tax audit, some deductions are more likely to invite the scrutiny of the Internal Revenue Service.

California residents that leave the state risk audits

Now that the federal government has raised the tax rate for the country's top earners to 39.6 percent, many people are deciding to leave California, which also raised its highest tax rate from 10.3 percent to 13.3 percent, for a state with lower personal income tax rates. Some people are even hunting for states that have no personal income tax at all. The problem is that states, including California, are beginning to notice the trend and are starting to commence audits on residents that leaving the state.

Audits of out-of-state non-profit ordered by California court

In an update from a previous post regarding a large donation made by an out-of-state non-profit to oppose Governor Jerry Brown's tax initiative ("California audits can arise for a wide range of reasons," Oct. 29, 2012), the California Supreme Court has ruled that the organization must disclose financial documents immediately. The request for the audits by California officials was granted by the court unanimously. The court, which issued its order at 3 p.m., gave the organization one hour to comply.

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