- Our Team
November 9, 2016
by: Graham Blackburn
Throughout history, people have harbored a certain degree of anger and fear for tax collectors. The modern day IRS is not too different. It’s a massive organization tasked with implementing a tax system that is simultaneously complicated and impactful. The dreaded IRS audit is the primary source of fear, but with a better understanding we can help alleviate some of that angst.
First off, it’s important to know that audit rates are declining. In 2015, the IRS only audited 0.8% of individual taxes, or about 1.2 million returns, with higher income taxpayers more likely to be selected. This marks an eleven year low. Small businesses, S-Corporations and Partnerships are seeing similarly low audit rates. Being selected for an audit does not mean you’ve done anything wrong. Often selections are simply at random.
If you do happen to get audited, it’s helpful to understand the basics of what that means and what transpires when the IRS comes knocking. Essentially, during an audit, the IRS has one of their agents review part or all of your tax return, in person or via mail. They request information to support the reported figures, checking to ensure the validity. Audits, or the potential for them, are the reason we’re told to retain reams of tax documents years after returns are filed. As a general rule, the IRS can audit any return within the last three years. However, if there is substantial error found on the return (>25% misrepresentation of income) the time-frame extends to six years. In the event of an audit, our goal at Hobe & Lucas is to assist you in dealing with the IRS agent, aiming for a determination that there should be “no-change” to the tax return.
After dealing with the IRS in past instances, I have a few thoughts and recommendations:
Overall, tax audits are fairly infrequent occurrences, but the fact is that some audits are unavoidable. It’s unfortunate to be selected for audit, but the whole process is – manageable – and therefore nothing to fear. Hobe & Lucas tax personnel are experienced and knowledgeable in complicated tax issues and compliance with them, and we’re here to help. Give us a call 216.524.8900 or contact us.
December 7, 2018
The Tax Cuts and Jobs Act (TCJA) was signed into law at the end of 2017. These new laws and regulations could have a major impact on your individual and business tax planning. Below are some questions and answers that may be applicable to your tax situation. This is the right time to take advantage […]
August 14, 2018
Technology is tricky. Much of today’s software is engineered so well that it will perform adequately for years. But new and better features are being created all the time. And if you’re not getting as much out of your financial data as your competitors are, you could be at a disadvantage. For these reasons, it […]