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What to do if you get a Business IRS Audit Notice – Paul Gaulkin CPA

sign saying internal revenue service

If you ever receive an IRS audit notice in the mail, it is important to understand what the next steps are in the process of solving your tax problem. Here is a list of steps that you should take once the notice arrives: 1. Review the Information Document Request (IDR) provided by the IRS. The IDR is a roadmap that explains the issues that the IRS agent would like to discuss with you. It is a common occurrence for the … Read more

IRS International Focus – Paul Gaulkin CPA

globe with international flags

With globalization continuing to grow and the IRS facing numerous problems from evasion of tax obligations through offshore entities and activities, there is a new international focus and priority that the IRS has underway. Cross Border Audits The IRS is working on various protocols for joint audits with other countries around the world. This process would not be simultaneous, it would be a process where two or more countries carry out a single audit of a company with cross-border business … Read more

Being a Consultant can get you Audited – Paul Gaulkin CPA

Balancing the Accounts

Sole proprietors that choose to be consultants have to face the fact that their industry is subject to a high probability of being audited by the IRS. This is due to the fact of the mixed personal versus business nature of many expenses of both the consultant and family members. Employee or Independent Contractor One of the main reasons the IRS audits a high percentage of sole proprietors who are consultants have to do with whether they are an employee … Read more

IRS Audit Credible Evidence Requirement – Paul Gaulkin CPA

cubes saying truth

If a taxpayer first introduces credible evidence into an audit with the IRS, the burden of proof will shift away from them and onto the IRS. This credible evidence must be in respect to factual issues relevant to ascertaining the taxpayer’s tax liability. Audit Credible Evidence Requirement Credible evidence is the quality of evidence which, after critical analysis, the court would find sufficient upon which the base a decision on the issue if no contrary evidence were submitted. This means … Read more

Tax Return Audit Required Filing Checks – Paul Gaulkin CPA

Audit checklist

Required filing checks is a procedure undertaking by the IRS during an audit to give consideration to whether all tax aspects involving the taxpayer’s sphere of influence and responsibility. This includes the inspection of prior year & subsequent tax returns, information returns, and the determination as to whether the taxpayer maintained adequate records. Tax Return Audit Required Filing Checks The following are generally what the IRS will wish to inspect: 1. Prior and subsequent tax returns are inspected for audit … Read more

Settling Business Audit Issues with Revenue Agent – Paul Gaulkin CPA

People with phone and paper

In most cases, it is best to settle any audit issues at the lowest level of the IRS. In the case of a business audit, settling issues with a Revenue Agent is the best way to attain a favorable settlement. Once an agent takes a position in a case, it becomes increasingly harder to overturn the agent’s decision the higher the case moves within the IRS. Review & Appeal During the review of the case file by the Group Manager … Read more

Correspondence Audit Request for Conference – Paul Gaulkin CPA

conference

A correspondence audit is an audit conducted by an IRS Service Center and involves issues that can be resolved either by mail or over the phone. In some cases, the taxpayer may wish to request a conference to discuss issues that they are having trouble communicating in writing or over the phone. Requesting a Conference It is simple to request a conference with the IRS to discuss a correspondence audit; however, it becomes more complicated if details are left out … Read more

IRS Imputed Interest on Corporate Loan Transactions – Paul Gaulkin CPA

loan signature

If a formal or informal loan has taken place between a corporation and the owner, a Revenue Agent will be able to see if an appropriate interest rate has been paid under IRC Sec. 7872. Recently, the applicable federal rate for loans has fallow to very low levels. This can be beneficial to taxpayers who can now replace existing higher interest loans with new lower rate loans or convert demand loans to term loans to lock in lower rates. As … Read more

Unreasonably Delaying an IRS Audit – Paul Gaulkin CPA

delayed

When the representative of a taxpayer has unreasonably delayed an IRS examination by failing to provide requested information on a taxpayer to the IRS, the agent working the case can request permission to contact the taxpayer directly. If permission is granted to the agent by the IRS, the agent can contact the taxpayer directly and request the information needed. The agent will also inform the taxpayer that the practitioner hired by the taxpayer has delayed the examination unreasonably.

Repetitive IRS Examinations – Paul Gaulkin CPA

loop

The IRS is not allowed to conduct repetitive IRS examinations against a taxpayer unless substantial audit adjustments are found. The IRS is allowed to audit the taxpayer for the same issue or issues in either of the two preceding tax years but if no substantial change in amount of the liability resulted, the auditor can close the case without adjustment. This basically means, the IRS is allowed to conduct repetitive examinations only in situations where an audit involving either of … Read more