IRS Audit Help

IRS Audit Help – What You Need To Know.

Auditing by Internal Revenue Services is enough to make any business or organization shudder with dread and fear. This is the moment when most people consider managing a defense strategy using IRS Audit help. You may decide to handle the audit yourself, since you have all the receipts and tax details, but it is highly advisable to take help from the accountant or CPA that handles your taxes.

Handling the Letter with IRS Audit Help
IRS auditors initiate the process by sending a letter to the organization. The first step is to review the letter carefully. Use your IRS Audit help to handle the documentation and the information the auditors are after. The IRS Audit help team can help pinpoint exactly what the auditors are looking for and why. Handling it yourself may lead to over thinking and you may miss the exact documentation and information

required by the auditors.
Most of the time, the letters are simply sent for cross-referencing tax entries with third parties, you need not worry too much about it. However, if the documentation and information required is too complex for understanding, it is wise to rely on tax preparers and other forms of IRS Audit help.

Providing EXTRA Information
Since interaction with auditors is one of the most dreaded tasks for a taxpayer or organization, one may be prone to over thinking and end up providing excess information to the auditors. Providing more than the required details will subject you to further interrogation from the auditors, which is why using IRS Audit help saves you from the hassle of efficient handling.

IRS Audit Help and Negotiations
Auditors demand payments for the missing links found in your tax returns and overdue payments of taxes. IRS Audit help is one of the most useful tools in negotiation of the terms of payment. The IRS can be mistaken about your tax returns and IRS Audit help negotiates your position with the IRS.

Ultimate Benefits of IRS Audit Help
The IRS Audit Help team you hire should comprise of the best CPA’s to handle complex tax managing. Along with that, the IRS Audit help can handle annual filing of tax returns and complicated tasks related to that efficiently.

There are several rights that taxpayers have when an audit takes place. The IRS Audit help makes you realize what these rights are:
• Right to an IRS Tax Audit Attorney
• Right to record meetings with prior notice
• Right to Waive Penalties if an IRS employee is responsible for mistakes in the tax returns
IRS Audit help ultimately gives you tips on how to AVOID future excursions by the IRS. The red flags of tax return management and working around them comes under the expertise of IRS Audit help.


You’re Fired! The story of an IRS auditor!!

Nobody really likes paying taxes. Sometimes, even the folks who work for the IRS resent paying the taxes that go towards funding their own salaries. Usually they just grumble about it and then go on with their day. But sometimes they try a little “self help.” So now let’s look at what one auditor did when she wanted to minimize her taxes.

Jacynthia Quinn spent 20 years as an IRS auditor in El Monte, California. The IRS audited her and her husband for 2006 (when she claimed $23,549 in charitable deductions and $22,217 in medical expenses) and 2007 (when she claimed $24,567 in charitable deductions and $25,325 in medical expenses). The Service disallowed those charitable and medical deductions, among other write-offs, and the case wound up in Tax Court.

You’d think an IRS auditor would be the first to know how to avoid an audit! So, how did Quinn do on the other end of the hot seat? Well, let’s look at those charitable contributions first:

“Petitioner proffered ‘receipts’ purportedly confirming charitable contributions. They were inconsistent and unreliable. Representatives from seven different charitable organizations credibly testified that the receipts were altered or fabricated. For example, petitioner offered a receipt purportedly substantiating $12,500 of charitable contributions to a religious organization. The purported receipt, however, identified individuals other than the couple as the donors. The organization’s records did not reflect any contributions made by the couple and confirmed that the other identified individuals had contributed $12,500.”

That doesn’t sound good. Bad enough if one donor testifies your receipts are faked. But seven? How about those medical deductions? Any better luck there?

“Petitioner similarly failed to substantiate the claimed medical and dental expenses. Some of her documentation also suffered from authenticity problems and appeared to have been ‘doctored.’ Petitioner offered three documents purportedly issued by Dr. Christopher Ajigbotafe or his staff confirming more than $9,000 in medical expenses for Mr. Quinn. Each document, however, spelled the doctor’s last name differently (‘Ajigohotafe,’ ‘Ajibotafe’ and ‘Ajigbotafe’). One ‘statement’ was dated in January 2006 and estimated expenses for the upcoming year. The amount of expenses for 2007 contained in another ‘statement’ was contradicted by a letter purportedly from the doctor’s staff.”

Keep in mind here that Quinn is an IRS auditor, with 20 years of training and experience auditing exactly these sorts of deductions! Naturally, the Tax Court didn’t show her a lot of sympathy — they sided with the IRS on every issue and even smacked her with a civil fraud penalty. In fact, the IRS Restructuring and Reform Act of 1998 requires the IRS to fire any employee who willfully understates their federal tax liability (unless they can show the understatement is due to “reasonable cause” and not “willful neglect”). Since Quinn’s own “excuse” is on a par with the dog eating her homework, she’s likely to lose her job as well.

It’s certainly entertaining to read about cases like Jacynthia Quinn’s. It’s satisfying to see a cheater get her comeuppance. And it’s great to see the IRS enforcing the same rules for its own employees as it does for us. But there’s a valuable lesson here, even for the majority of us who don’t cheat. Dotting the “i’s” and crossing the “t’s” is important for everyone. That’s why we don’t just outline strategies and concepts to help you pay less tax. We work with you toimplement those strategies and document them to survive scrutiny. And remember, we’re here for your family, friends, and colleagues too, so give us a call: 773-728-1500.


A BIG Auch!!

The English novelist and playwright Henry Fielding once wrote that “a rich man without charity is a rogue; and perhaps it would be no difficult matter to prove that he is also a fool.” But sometimes you can be rich, charitable, and foolish, all at the same time. And that can make for some really expensive mistakes.

Joseph Mohamed is a California real estate broker and appraiser who has made a fortune buying, selling, and developing real estate. In 1998, he and his wife Shirley set up a charitable remainder trust for the benefit of the Shriners Hospitals for Children, the Sacramento Food Bank & Family Services, and the Pacific Legal Foundation. Then, in 2003 and 2004, he donated six California properties to the trust: four adjacent street corners in Rio Linda, a 40-acre subdivided parcel south of Sacramento, and a shopping center in Elk Grove.

Mohamed prepared his own taxes for those two years—definitely not standard operating procedure for someone in his shoes. When it came time to fill out Form 8283, “Noncash Charitable Contributions”, he skipped the instructions because “it seemed so clear that he didn’t think he needed to.” The form said the description of the donated property could be“completed by the taxpayer and/or appraiser”. And Mohamed was an appraiser, right? Of course he knew what his own properties were worth. How hard could it really be? He attached statements to his returns explaining how he valued the two biggest parcels. Then he deducted $18.5 million for the gift, satisfied that he had done all he needed to substantiate his write off.

It turns out, though, that the IRS wants a teensy bit more than just your say-so before handing out eighteen million in benefits. In fact, they have some pretty specific rules for deducting anygift of property worth more than $5,000. You need a “qualified” appraisal, made no sooner than 60 days before the gift and no later than the due date of the return reporting the gift itself. It has to be signed by a certified appraiser — not the donor or the taxpayer claiming the deduction. And the appraisal has to include specific information about the property itself, your basis in the property, and how you acquired it in the first place.

The IRS started auditing Mohamed’s 2003 return in April, 2005. You can probably imagine how charitably inclined they were toward his self-appraisal. So Mohamed went out and gotindependent appraisals showing the properties were worth over $20 million — two million morethan he deducted. And the trust actually sold the 40 acres south of Sacramento for $23 million. You would think that would be enough. But you would be wrong. The IRS held firm, and the case wound up in Tax Court.

Last month, the Court issued their 26-page opinion in Mohamed v. Commissioner. They ruled that none of Mohamed’s appraisals were “qualified” under Section 1.170A-13(c)(3)(i) and shot down his entire deduction. The Court confessed that

“We recognize that this result is harsh — complete denial of charitable deductions to a couple that did not overvalue, and may well have undervalued, their contributions — all reported on forms that even to the Court’s eyes seemed likely to mislead someone who didn’t read the instructions […] the problems of misvalued property are so great that Congress was quite specific about what the charitably inclined have to do to defend their deductions, and we cannot in a single sympathetic case undermine those rules.”

So, ouch. Big, big ouch. Eighteen million bucks worth of deductions, lost because someone didn’t dot the i’s and cross the t’s. Six million in actual tax savings, down the proverbial drain.

We realize it sounds self-serving to tell you to come to us before you make a big financial move. But Joseph Mohamed’s case emphasizes how important this really is. You may not have millions riding on doing it right. But are you really willing to risk tax benefits you truly deserve by doing it yourself?


A Dubious Privilege

The “Occupy Wall Street” movement argues that we live in a divided nation. First there’s a gilded “1%” enjoying lives of ease and privilege. Then there’s a downtrodden “99%” struggling just to stay in place. But here’s a take on “the 1%” that you won’t hear at your local tent city . . .
The IRS is struggling just like the rest of us to carry out its mission with limited resources. Back in 2003, they audited just one out of every 203 returns. By 2010, that number was up to one out of 90. To stretch that audit budget even further, they’re auditing more and more taxpayers by mail. But one study shows that 10% of IRS mail never gets where it’s supposed to go, and 27% of those who do get their mail don’t even realize they’re actually being audited! Naturally, that leads to more and more of the paperwork screw ups that every taxpayer fears.

Enter Nina Olson. She’s the IRS’s first and only Taxpayer Advocate, a position created by the 1998 “Taxpayer Bill of Rights” act. She supervises the Taxpayer Advocate Service, a nationwide group of 2,000 caseworkers who specialize in cutting through red tape and greasing the wheels of the great gummy IRS machine. If the IRS sends your mail to the wrong address, slaps you with a lien after you’ve already paid your bill, or just makes a mistake they can’t seem to fix, Olson’s office is the one we’ll call.

Last month, Olson delivered a presentation to the Federal Bar Association on how “the 99%” experience the tax system. And the picture she painted makes a tent in lower Manhattan Park look like a room at the Ritz. One in three taxpayers who call the Service don’t get an answer. Only half of those who write hear back within six weeks. The IRS is relying on computers instead of people to audit all but the highest-income taxpayers. And perhaps most curious of all, she says, “we’re getting to a situation where the only people who get face-to-face audits are the 1%”!

Now, correct us if we’re wrong, but do you really consider face time with an IRS auditor a “privilege”? We all know that at least some level of government is necessary. But there are just some parts you don’t want to see up close and in person. Like the “Level 4″ Biolab at the Atlanta Centers for Disease Control, for example, where we store the Ebola virus, Crimean-Congo hemorrhagic fever, and other superbugs we can’t risk having out on the loose. Or the “Supermax” penitentiary in Florence, Colorado, where we “store” the most dangerous felons we can’t risk having out on the loose. Or the inside of any IRS Service Center!

Does Olson’s “1%” comment conjure up images of plush IRS offices, with thick oriental carpets and rich leather upholstery, staffed by discreet, white-gloved concierges sitting at granite-topped desks? We can assure you that when it comes to getting audited, even the 1% have to settle for the same government-issue linoleum floors, metal chairs, and battleship gray desks as everyone else. (And really, in the unlikely event you are audited, we probably won’t let you go with us anyway! Trust us “? it’s for your own protection.)

We talk in these articles about how proactive planning cuts your tax bill. But paying less tax isn’t the only perk of a good tax plan. Did you know that smart tax planning can also cut your audit risk? In fact, some strategies “? like choosing certain business entities “? can cut that risk by as much as 90%. So call us if you think face time with an auditor is a “privilege” you can do without!