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IRS Tax Problem?(954) 946-4142


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What to Search For in the Right Type of Tax Relief Service

As you look for a tax relief service there are numerous many details that you need to contemplate. Getting the right service on your side is extremely essential. In the event that you commit any errors, you may end up managing the wrong organization. This can prompt a considerable measure of lost time and cash.

Here are a few things to search for in a tax relief service:

1. Experience: You need to hire a service that is accomplished. Along these lines you know beyond any doubt that they are on the whole correct from the begin, and fit to help you get the outcomes you seek. Some tax relief services have more experience than others. This is an address that you need to approach as you are hunting down the ideal result.

2. Don’t pay a retainer charge: With this, you are going to get charged, after a long time, until an agreement is arrived at with the IRS. As you can envision, this can drag out for a long time. In turn, you are paying cash actually when no advancement is, no doubt made. While you will need to pay for expert help, there is no motivation to do so on a “retainer” basis.

3. We can help you settle your obligation for pennies on the dollar. How frequently have you heard this? At the point when a tax relief service says this, they are referring to the Offer in Compromise program. Despite the fact that you may fit the bill for this, most individuals observe that they don’t. Whenever an organization says they can ensure you this, the time it now, time to search for help in an alternate spot.

4. Check with the Better Business Department before you do anything. In the event that you find that numerous other individuals have had issues with an organization, it probably makes sense to avoid them at all costs. You just need to work with a tax relief service that has an extraordinary notoriety for helping individuals in your circumstance.

5. Avoid companies that call you direct, before you connect with them. On the off chance that you have a lien against you, for instance, you may start to accept calls and letters from tax experts that claim to have the capacity to help. These organizations can hide their terrible notoriety by reaching powerless taxpayers. You would prefer not to fall prey to this sort of organization. Rather, you ought to be the one starting contact.

As you look for the right tax relief service you ought to think about the five subtle elements above, and additionally any others that are of significance to you. You will figure out soon enough that you can procure a qualified, accomplished firm on the off chance that you recognize what you are doing and are ready to take as much time as required.

Choosing the right service is much simpler in the event that you comprehend what you are searching for. The counsel above can go far in guaranteeing that you procure an organization that you are open to working with. There are numerous tax relief services out there. Make certain to settle on the right choice!

Tax Relief Services for South Florida

We provide IRS tax help, tax relief, tax resolution and IRS audit representation in the South Florida Metro area of Miami, Miami Beach, Hialeah, Kendall, Fort Lauderdale, Pembroke Pines, Hollywood, Miramar, Coral Springs, Miami Gardens, Pompano Beach, Deerfield Beach, West Palm Beach, Boca Raton, Boynton Beach, Miami Dade county and Broward county of Florida.
The IRS has identified many individual and business taxpayers who fail to file income tax returns (1040 for individuals and 1120 for corporations) and employment tax returns (940 and 941) and these taxpayers have effectively stopped paying federal taxes as a serious matter to the US tax administration and the American economy as a whole. The IRS is actively pursuing non-filers owing back taxes with aggressive enforcement of the tax laws by issuing record numbers of tax levies and tax liens.
Floridian taxpayers who do not respond to the IRS notices or simply refuse to comply with the tax laws end up being levied through their paychecks and bank accounts. For those individuals, who deliberately fail to comply with their tax obligation to file the required tax returns and pay the back taxes due and owing, that IRS Criminal Investigation devotes its investigative resources. In the most criminal cases, criminal prosecution is recommended to the United States Attorney’s office.
If you have not filed your past returns, you might need professional tax help. To avoid criminal charges and/or to add to the civil charges, it is important to file your unfiled tax returns even if it is late or you cannot pay the back taxes owed.
Our firm can assist you in getting compliant and resolving your back tax debt and help you organize your tax documents and getting you back in compliance with the law. Our job is to work with the IRS to reach a reasonable resolution. Back tax debt resulting from unfiled returns is a complicated process and you need a tax relief professional on your side that has the special expertise to resolve your tax matters once and for all.We are “A+ Rated” accredited member of the Better Business Bureau, and we are a nationwide tax relief service firm.Get tax relief today by calling 1 – (954) – 946 – 4142.

Back taxes help, IRS audit representation, Enrolled Agent, CPA, Tax attorney, Tax lawyer tax services serving South Florida Metro area of Miami, Miami Beach, Hialeah, Kendall, Fort Lauderdale, Pembroke Pines, Hollywood, Miramar, Coral Springs, Miami Gardens, Pompano Beach, Deerfield Beach, West Palm Beach, Boca Raton, Boynton Beach, Miami Dade county and Broward county of Florida.

TIGTA Audit concludes that IRS does not properly respond to taxpayer correspondence [Audit Report No. 2011-40-058]: IRS does not adhere to its self-imposed policy of providing quality and timely responses to taxpayers’ correspondence regarding tax issues, the Treasury Inspector General for Tax Administration (TIGTA) said in a recent audit. As described in the audit, the agency’s policy, which is contained in Policy Statement P-6-12, is to respond to a taxpayer within 30 calendar days or provide an update on the status of the response. The audit found that while most responses to tax issue inquiries were accurate, the timeliness of most responses was inadequate. Interim letters are often mailed when the 30-day deadline cannot be met, the audit noted. “However, none of the systemically issued interim letters provide taxpayers with any information specific to their accounts, and the content is not clear regarding what taxpayers need to do,” TIGTA said. The results of the audit were based on two statistical samples and one judgmental sample from three IRS functions. According to the audit, of 73 correspondence cases sampled from the Accounts Management function, just 14 taxpayers (or 19%) received timely and accurate responses. In the review of 48 correspondence cases sampled in the Automated Underreporter Program, every taxpayer received an accurate response, but only 27 (or 56%) received a timely response. In the third sample of 73 correspondence cases from the Field Assistance Office, just six taxpayers (or 8%) received timely and accurate responses. Auditors also found that required interim letters were not always issued. “Finally, the IRS is not following Policy Statement P-6-12 guidelines and has not implemented any measures or processes to monitor and evaluate Policy Statement P-6-12 correspondence to ensure taxpayers receive timely responses to their correspondence,” TIGTA said. The audit is available at

Get tax relief today by calling 1 – (954) – 946 – 4142.

Tax relief, tax resolution, tax problem help, 941 employment tax help, IRS tax audit serving South Florida Metro area of Miami, Miami Beach, Hialeah, Kendall, Fort Lauderdale, Pembroke Pines, Hollywood, Miramar, Coral Springs, Miami Gardens, Pompano Beach, Deerfield Beach, West Palm Beach, Boca Raton, Boynton Beach, Miami Dade county and Broward county of Florida.

**Answers to your IRS Problems are just a click away!! You have nothing to lose and all to gain.**

For prompt evaluation of your case, we encourage you to register for our IRS Account Analysis

With an IRS Account Analysis from our office, we can conduct a thorough evaluation of your record of account with accurate recommendations based on our findings. If we find errors, you can rest assured that by engaging our services, our office will act as your representative and resolve your IRS problems on your behalf.

For prompt evaluation of your case, we encourage you to register for our IRS Account Analysis .

How to Deal with Back Taxes Owed ?

Though Total Tax Solution & Company is best known for dealing with the IRS on behalf of our clients who are seeking IRS tax debt relief, the reality is that if you owe back taxes to the federal government, there’s an excellent chance you also owe money to some other taxing authority, such as your state or local governments. About half of the clients who come to us for back tax help owe taxes to more than one entity. It could be state income tax, sales tax, employment-related taxes, or a combination of several state-specific taxes. Whatever it is, you probably already know about it, because most states tend to be more aggressive with their collection efforts than the IRS is. States also tend to charge more in interest and penalties that the IRS does. That often comes as a surprise, but the reason is very logical when you compare the difference between a state’s budget and the federal budget: The amount you owe to a state is likely to be more significant to the state than the amount you owe to the IRS is to the federal government. Also, states typically do not have the collection resources the IRS does in terms of liens and levies, so they are likely to harass you sooner and to a greater degree than the IRS does.The first step in dealing with other taxing authorities—much like it is with the IRS—is to be sure that all of your state tax returns have been filed. As part of this process, if you are an employee in a state with state income tax, be sure you have received accurate withholding information from your employer and that the information you have matches the information your employer has reported to the state. Beyond that, be aware that dealing with state and local taxing authorities can be quite different than dealing with the IRS.

Once you are in compliance with state regulations regarding filing returns and have determined what you owe in back taxes, the next thing you should do is check to see if your state offers any sort of an amnesty program. Under these programs, states will take actions such as forgiving interest and penalties if you pay the tax due by a particular date—something the IRS doesn’t do. If your state doesn’t have an amnesty program, you still have options.

Most states have programs similar to the IRS’ offer in compromise and installment agreements, but the state programs are not going to be exactly the same as the federal counterpart. That means qualifying for an OIC with the IRS doesn’t mean you’ll automatically qualify for it with your state. By the same token, you may not qualify for an OIC with your federal taxes and yet qualify for it with the state. Also, the state’s terms may be different—for example, many states that will accept OICs or installment agreements do so with the requirement that the tax be paid within a much shorter length of time than the federal government allows.

Remember that, just as the federal government can, states can also put liens on your property and levy your bank accounts and wages. States can also ask the IRS to send any refunds you may be due to the state to pay off your state liability. I recommend that you do everything possible to avoid a state lien or levy. It’s been the experience of the tax professionals at Total Tax Solution that most states are far more reluctant to release a levy or garnishment before the tax liability is paid in full than the federal government is, even after payment arrangements have been made.

Something else a state can do to delinquent taxpayers is to not renew certain licenses under your tax obligation is settled. Back state taxes can put a lot of licenses in jeopardy, including various occupational licenses and even driver’s licenses.

If you are a business and owe back sales tax, you are at risk of what’s called a cash register levy. That’s when the state sends a representative into your business to stand at the cash register and take whatever cash comes in. When you think about the impression that would make on your customers, you’ll understand why I am saying to do everything you can to avoid getting to that point. The states are also much more likely to shut down a business for delinquent sales tax than the IRS is for other delinquent taxes.

**Answers to your IRS Problems are just a click away!! You have nothing to lose and all to gain.**

For prompt evaluation of your case, we encourage you to register for our IRS Account Analysis .

With an IRS Account Analysis from our office, we can conduct a thorough evaluation of your record of account with accurate recommendations based on our findings. If we find errors, you can rest assured that by engaging our services, our office will act as your representative and resolve your IRS problems on your behalf.

For prompt evaluation of your case, we encourage you to register for our IRS Account Analysis .

Change is Good! IRS Enhances Fresh Start Program

Unfortunately, we all wind up in situations that can have dire consequences on our financial well-being. Sometimes we are directly responsible for our debt or the catalyst can be outside of our control. Whether it is simply bad spending habits, bad financial decisions, a job layoff, business decline due to the economy or medical hardship, you can find yourself in a bad financial situation and before you know it, you suddenly owe the IRS a significant amount of unpaid taxes.

As we all know the IRS is relentless. If you owe taxes, the IRS can and will issue tax liens on your personal property and your income. Between interest and penalties they assess, the amount owed seems completely insurmountable.

What you may not know is that the IRS has a program called “Fresh Start”. The program has helped many taxpayers and small business resolve their tax situations. However the original requirements of the program only covered a small pool of taxpayers. With the new changes in place more individuals and small businesses have the opportunity to truly have a “Fresh Start”.

What you should know about the recently enhanced IRS Fresh Start program:
• An easier lien removal/elimination process
• Simplified access to developing an installment agreement
• Streamlined Offer in Compromise process
• Higher thresholds to qualify for the Fresh Start Program.
What’s new – Credit Score Relief:
• The ability to completely remove a federal tax lien from their credit report – up to 200 points improvement in an individual’s credit score.

Total Tax Solutions has over 20 years of experience in helping individuals and small businesses navigate the complexities of the Internal Revenue Service Tax codes. Total Tax Solutions works directly with each client, addressing concerns, discussing strategy and representing clients through the process. The process always starts with an IRS Check Up, allowing us to gather, examine and determine the best remediation process possible.

The recently enhanced IRS Fresh Start program offers numerous benefits for any who owes back taxes and qualifies under the guidelines of the program. At Total Tax Solutions, we believe that it is important that you know you all the options available to resolve your tax problems. The current economy has left many in dire financial stress. We encourage anyone with questions to contact us for more information or visit the IRS to investigate your options and end your IRS tax problems.
In short, the IRS has changed their program for the benefit of taxpayers; we can assist you in achieving financial freedom from your IRS debt.

Stopping Wage Garnishments

If you’re facing wage garnishment you may be unclear about the process. It’s important to find out exactly how the wage garnishment procedure works so that you can make plans to repay your debt as quickly as possible and stop wage garnishments. To do this you’ll need to clear up a few wage garnishment myths:

1. My employer has to ask my permission before garnishing my wages.

This is untrue. Once your employer receives a notice that your wages are subject to garnishment, he or she is legally obligated to comply immediately. Your boss does not have to inform you of the garnishment.

2. I won’t receive any notice before my wages are garnished.

Legally, the government is not required to inform you of an upcoming garnishment. However, individuals generally receive several notices before collection action is taken.

3. I can’t stop wage garnishment from happening once I get a final notice.

A final notice is issued after several previous notices have been disregarded. After you receive a final notice you’ll have 30 days to either request a hearing or establishing an arrangement for repayment. If you do not take these steps within the 30 days your wages will be garnished.

4. The government has to leave me enough money to cover my expenses.

The government does not have to consider your other financial expenses during the garnishment process. Legally, you can be left with less than $200 on each check if you’re single and less than $300 if you’re married.

5. If my wages are garnished, my employer can fire me.

Your employer cannot fire you for one wage garnishment levy. However, if you have two garnishments your employer can legally terminate your employment. This also applies if you have more than one debt that is being repaid through garnishment at the same time.

6. Child support and back taxes are the only debts that can be collected through garnishment.

While taxes and child support are the most common debts that are collected by wage garnishment other debts can also be repaid through this procedure. Student loans, past due court fines and civil monetary judgments can all be collected in this manner.

7. The government can only garnish my wages for one debt.

This is an important myth to clear up, since you can be fired for more than one wage garnishment as mentioned above. If you have multiple past due debts the government can garnish your wages for all of them at the same time.

Wage garnishment poses real financial risks to employed individuals. Understanding the truth about some common wage garnishment myths and consulting a tax resolution specialist can help you decide how to resolve your past debts quickly.

IRS Increases Criminal Investigations, Prosecutions and Convictions of Tax Evaders and Preparers in 2012

IRS Increases Criminal Investigations, Prosecutions and Convictions of Tax Evaders and Preparers in 2012
The IRS recently released statistics on criminal investigations conducted during 2012. These statistics focus on tax evaders and tax preparers that came under the scrutiny of the IRS during the past fiscal year. In comparison to the previous year, investigations and prosecutions both increased by approximately 9% for evaders and tax preparers.The IRS’s criminal investigation unit specializes in complex financial investigations. The types of financial crimes that the bureau pursues include tax fraud, identity theft, money laundering, public corruption and offshore tax evasion. Every year, the IRS’s Criminal Investigation (CI) unit conducts thousands of investigations into these types of activities.
The IRS has also increased the numbers of indictment filings as well – by 13%. Convictions are also went up by 12% during this recent time period. Conviction rates are solid – 93% for 2012. The IRS’s CI unit is doing a very good of compiling the necessary evidence to build strong cases against the accused. With today’s access to electronic data and the ability to track financial movements; it is more difficult for criminals to get away with these types of crimes. In addition, the IRS is also spending more time going after the individuals responsible for helping these criminals and tax evaders.

It is clear that the IRS has improved their track record when it comes to criminal activities, utilizing their forensic capabilities in analyzing complex paperwork and computerized records and transactions. The bureau’s goal is to be the best at financial investigations worldwide.

Visit the IRS’s website to read the full IRS Criminal Investigations Annual Report for 2012.

Employment Tax Problems

Employment Taxes
If you have your own business, there is plenty going on all the time. In addition to taking care of your customers, you have to take care of your employees. Payroll can be very difficult with the many scenarios, and that can lead to an employment tax problem. Don’t feel like you are alone though as 941 payroll tax problems are extremely common when it comes to the IRS and what they have to look into.

Complex Issues It isn’t that businesses aren’t trying to comply with the IRS. However, when it comes to employment taxes, there are so many complex issues that have to be completed. There are forms that each employee has to fill out so that the right tax information can be used for their payroll. There are also forms that have to go with the deposit for payroll taxes.A common employment tax problem is that the form isn’t filled out accurately. The IRS will help you so if you aren’t sure let them know. If you turn it in incorrectly, they may penalize you by adding on a fee. They don’t always do so, but they do have the option. If the amount of the payroll taxes isn’t correct or the form and funds aren’t turned in on time you are more likely to get a fine.

An employment tax problem can be due to social security tax, Medicare tax, Federal income tax, or the Federal unemployment tax. Any of these can create issues with the funds you turn in to them. For many of the taxes, the employer has to withhold funds from the employees. They also have to contribute a matching amount which is where the formulas can become very confusing.

The other concern is that some employment tax information has to be reported every quarter. Then there are those elements of it that only get reported once a year. Reporting though is very different from the actual depositing. This is also an employment tax problem that people get involved with.
In the simplest terms, the reporting tells the IRS how much money you owe them for employment taxes. The deposit though is the actual process of paying those funds. If you don’t pay them on time or in the correct amount, then there are concerns. The size of the payroll will determine how often you make deposits. It could be once a month or twice a month. The IRS will tell you which one is to be followed for your business.

Solving an Employment Tax Problem

If you are paying your employment taxes late or you don’t understand how much to pay, we can help you. We can assist you with getting your 941 payroll elements on track and done accurately. You certainly don’t want to be bothered all the time by the IRS. You also don’t want to see your profits reduced due to fines and penalties.

Regardless of where things are for you right now, we can fully assess the situation. We can help you to figure out how to pay your employment taxes on time. We can also help you to work out a plan if you are behind on the amount that you owe. Being able to negotiate a settlement on your behalf with the IRS is something we have lots of experience with.

Part of that settlement process includes getting fines and penalties removed from the amount you owe. Owning a business can be a great asset to you, but you don’t want to get into a jam with the IRS over employment taxes.

**Answers to your IRS Problems are just a click away!! You have nothing to lose and all to gain.**

For prompt evaluation of your case, we encourage you to register for our IRS Account Analysis .

With an IRS Account Analysis from our office, we can conduct a thorough evaluation of your record of account with accurate recommendations based on our findings. If we find errors, you can rest assured that by engaging our services, our office will act as your representative and resolve your IRS problems on your behalf.

For prompt evaluation of your case, we encourage you to register for our IRS Account Analysis .

IRS Audits – What to Expect

Being selected for an IRS Audit doesn’t mean “the IRS is out to get you”. Most audits are computer generated due to an error between what was reported on your return verses electronic information reported to the IRS. Occasionally, the IRS’s computers randomly selects your number for audit. Your business/profession can be selected to participate in an annual initiative to “test” industry compliance. Or, a competitor or disgruntle employee “squealed” on you. The IRS should inform you as to why you/your return has been selected for audit.

Preparing for the Audit

If you are on Tax Audit Representation of the unlucky few who are chosen for a tax audit, you’ll need to be prepared. It is crucial that during an audit, you have representation. The first step should be to take a good look at the details of your return to refresh your memory and discuss any issues with your tax professional. Once you have a thorough understanding of the contents of your tax return, you’ll need to organize your records to support the items questioned by the IRS. Prior to the actual examination, Total Tax Solutions will discuss a range of issues that you are comfortable accepting. This will prepare you for possible settlement terms that might be discussed later by the examiner. By consulting with an Total Tax Solutions up front, you can learn what to expect from the IRS, what questions that you will be asked, and what documents they will require.

Typically, matters being questioned or disputed by the IRS are complicated, Total Tax Solutions will provide you with expert counsel to easily explain the technical nature or the issues/position formulated by the IRS. If you decide to attend the examination, take only the records related to the items in the IRS Notice of Audit – do not volunteer extra records, since you may end up subjecting yourself to a new investigation. If the examiner happens to question you on an item not mentioned in the IRS notice, you should refuse in a polite but firm manner until they file a formal request for this information.

There is a risk to attending the audit without representation, the agent will want to expand the audit into prior or subsequent year tax returns or will want to audit related returns. This should be discouraged because it increases your exposure and risk. Every attempt should be made to answer the agent’s questions and provide documents in such a manner as to discourage the “mushrooming” of the audit into other entities and issues.

If the audit occurs in your place of business, all employees should be instructed not to talk about the business or the audit with the IRS agent. Inquiries from the IRS agent should be referred to you or Total Tax Solutions. Finally, 10 days prior to the interview, you should give the IRS written notice that you will be making an audio recording of the interview with the IRS agent. Video recordings are not allowed.

Total Tax Solutions Can Help

Taxation is very complicated and technical and you will likely benefit from having Total Tax Solutions on your side. Many taxpayers go into an audit totally unprepared and hope for the best. Taxpayers think that if they can impress the auditor that they are nice, law-abiding, decent human beings and not common criminals, the IRS auditor will be friendly, be sympathetic, and politely let them off the hook. That is the furthest thing from the truth. Tax auditors employ tactics to be nice, to probe and detect errors and do not think too kindly of others who don’t comply with the tax codes.

Deadlines are Key!

The IRS is limited in time in which to collect from you. Similarly, your rights to disagree and certain options to exercise your rights lapse as well. Allow enough time to deal gathering information and responding. Don’t hire a professional the day of your schedule examination!

Be proactive! Be sure to show that you are responsive. Doing nothing is the wrong way to go! Your responsiveness clearly indicates that you acknowledge that a problem exists and that you are dealing with it. If you need additional time, ask for it! Similarly, you can ask for second or third extensions with generally little resistance. The ability of the IRS to collect from you is quite lengthy and they will generally patiently wait it out.

Organization is Paramount!

Don’t show up with a box full of receipts, bills, etc. When asked a direct question, have the information readily available. Don’t hunt for the information during an examination. Don’t bring documentation that you don’t need. This can only hurt you!
Staying in touch and Following up!
IRS auditors have tremendous case loads and only limited time to work on yours. Set deadlines and follow up. If you don’t hear back, follow up again. In writing!

The Bottom Line

Usually, the IRS will conduct an audit of a tax return only if it sees some invalid deductions or other expenses and it is confident that the audit will result in a tax collections. Less than 2 to 4 percent of the tax returns that are filed are audited. If your number comes up, be prepared to get things organized and to present your personal/business in the most favorable light possible.

Although audits are unpleasant, you don’t need to dread them if you’ve kept your financial records organized, up to date and above board. If you are chosen for an audit, make sure the examination is scheduled far enough in advance for you to get ready. Solid preparation should enable you to get through the audit with a minimal amount of stress. A big part of handling an IRS audit is communication and the ability to manage difficult personalities. If you have these skills, you may want to handle the audit yourself. If not, you may need a “hired gun!”

The First Step in Tax Resolution

Tax Resolution. If you need tax debt help, you need to take care of first things first — and the first thing is to figure out how much you owe. You cannot resolve your tax problems until you know exactly what they are. If you haven’t filed your tax returns, you must do so, even if you can’t afford to send any money with the returns.
You may file your tax returns electronically for the current year only. Late returns must be filed on paper. If you have one or more tax returns that are past due, it’s a good idea to file them at the same time but, if you are filing for more than one year, put each return in a separate envelop and send it by certified mail, return receipt requested.
You can purchase the major tax preparation software packages for previous years on websites such as H&R Block and TurboTax. This will allow you to prepare your returns on your computer but you must still print out all the completed documents and mail them to the IRS. Or you can get all the forms for free on the IRS website or by calling the IRS, but if you do that, you’ll have to fill them out by hand. Unless your returns are extremely simple, the software is a worthwhile investment. Some of the tax preparation software packages will deeply discount their versions for previous years or even provide it for free when you purchase the current year.
When filing your returns, do not skip any years. Start with the oldest year you haven’t file and file them in order or all at the same time. Once you’re in compliance with IRS regulations, are current on filing your returns and know exactly what your tax liability is, you can work on a plan to take care of the situation.
If you need help getting those back returns filed or developing a plan to resolve your IRS tax debt, contact us (954) – 946 – 4142.
**Answers to your IRS Problems are just a click away!! You have nothing to lose and all to gain.**For prompt evaluation of your case, we encourage you to register for our IRS Account Analysis .

With an IRS Account Analysis from our office, we can conduct a thorough evaluation of your record of account with accurate recommendations based on our findings. If we find errors, you can rest assured that by engaging our services, our office will act as your representative and resolve your IRS problems on your behalf.For prompt evaluation of your case, we encourage you to register for our IRS Account Analysis .

IRS to Increase Audits of Prior and Subsequent-Year Tax Returns

The report, by the Treasury Inspector General for Tax Administration, noted that the IRS relies heavily on the correspondence audit process to examine individuals who are suspected of under reporting their tax liabilities.The correspondence audits often result in significant additional tax assessments, and the IRS has found them to be more economical than other types of audits. Statistics indicate that in fiscal year 2012, the IRS conducted 1.1 million correspondence audits and recommended approximately $9.2 billion in additional taxes.For its report, TIGTA set out to determine the effectiveness of the filing checks made during the correspondence audit process in the IRS’s Small Business/Self-Employed Division. Filing checks are used, in part, by the SB/SE Division to determine whether the same pattern of noncompliance identified on an audited tax return is present on the prior- and subsequent-year tax returns, and if those tax returns also warrant an audit. When they are properly completed, filing checks enable the IRS to better leverage its auditing resources by increasing the overall compliance coverage of every audit.

TIGTA evaluated a statistical sample of 102 out of 7,470 single-year correspondence audits in which the taxpayers involved agreed that they understated their tax liabilities by at least $4,000. Similar tax issues also existed on the prior- and/or subsequent-year tax returns for 43 of the 102 taxpayers. TIGTA found that 32 of the 43 individuals did not have those tax returns audited and, as a result, may have avoided additional assessments ranging from $2,343 to $18,874.

TIGTA pointed out in its report that one factor that may have contributed to the limited number of prior- and/or subsequent-year tax audits in the sample it examined is the emphasis the IRS places on keeping its audit inventories free of older tax years so there is enough time to complete audits and assess any resulting taxes within the three-year assessment statute of limitations. There are also some control issues involving how current-year audit results are used to decide whether to audit any prior- and subsequent-year tax returns.

TIGTA recommended that the IRS develop and implement procedures that instruct its auditors how they should use current-year correspondence audit results when deciding whether the prior- or subsequent-year tax returns also warrant an audit. To ensure that the instructions are followed,

TIGTA also recommended that the procedures should include instructions for monitoring how well current-year correspondence audit results are used in deciding to audit prior- and/or subsequent-year tax returns.

The IRS agreed with TIGTA’s recommendation and plans to develop an Internal Revenue Manual section to address the case selection and delivery process, in addition to the duties and roles of IRS analysts and examiners.

“We agree that, in certain circumstances, it makes sense to audit the prior- and/or subsequent-year return; however, we need to consider various factors when making that determination,” wrote Ruth Perez of the IRS’s Small Business/Self-Employed Division, in response to the report. “For instance, when deciding whether to select a prior-year return, both the burden on the taxpayer and the administrative responsibilities of the IRS must be considered when there is limited time remaining on the statute of limitations. In addition, to best use our limited resources, we select the next best case for examination which may not be the prior or subsequent year of the taxpayer under examination. We will create procedures for selecting prior-year returns taking these items into consideration.”

The SB/SEC Division has already developed and implemented procedures for addressing all subsequent-return filings on the agreed and default discretionary workloads that are delivered by the IRS’s Campus Reporting Compliance unit, she pointed out.
“We will ensure those procedures are properly documented and monitored,” Perez added. “We agree that there may be some measurable benefit derived from your recommendations. However, we believe the outcome measure, as calculated, does not take into account the impact of our model of working the next best case or our procedures to ensure we only work cases with sufficient time on the statute of limitations for assessment.”