An IRS audit puts specific items on your tax return under scrutiny. The question is whether the records and tax treatment you used support what you reported.
An audit does not automatically mean you did anything wrong. The IRS may review a return because information on the return needs clarification, certain items stand out, or the agency’s records do not match what you reported.
Gabaie & Associates represents individuals and businesses in Frederick facing IRS audits, proposed tax adjustments, examinations, and appeals. The firm can help you understand what the IRS is asking for, respond to requests for information, and challenge proposed changes when the facts or tax law support your position.
If you are facing an IRS audit or disagree with an IRS tax decision in Frederick, call Gabaie & Associates at (410) 358-1500 or contact the firm online to discuss your situation.
What Is an IRS Audit?
An IRS audit is a review of a tax return and the information used to prepare it. The IRS may ask for documents, explanations, or other information to determine whether the return was reported accurately.
An audit can take different forms. Some audits are handled entirely through correspondence, while others involve a meeting with an IRS examiner. The scope can also vary. The IRS may examine specific items on a return or conduct a broader review.
Common areas that may receive attention include:
- Income reported on W-2s, 1099s, and other information returns
- Business income and expenses
- Itemized deductions
- Credits
- Investment transactions
- Self-employment income
- Real estate transactions
- Charitable contributions
- Depreciation and other business deductions
Receiving an audit notice does not mean the IRS has already determined that your return is wrong. The examination is an opportunity for the agency to review the information and for you to provide records supporting your tax position.
What Happens During an IRS Audit?
The audit process depends on the type of examination and the issues involved.
The IRS may send a written request for documents or ask you to meet with an examiner. You may need to provide receipts, bank statements, invoices, contracts, mileage records, investment statements, or other documentation supporting the information on your return.
You generally should respond only to what the IRS is requesting, while making sure your response is complete and accurate. Providing disorganized or incomplete records can make it harder to explain your tax position.
An audit may end with no changes to your return. The IRS may also propose changes that increase or, in some cases, decrease the amount of tax you owe.
If the IRS proposes additional tax, you generally have an opportunity to respond before the assessment becomes final.
What If I Disagree With the IRS Audit Results?
You do not necessarily have to accept an IRS examiner’s proposed changes.
If you disagree with the findings, you can explain your position and provide documentation supporting it. Your response may address factual errors, missing records, differences in how a transaction was characterized, or disagreements about how the tax law applies.
For example, the IRS may disallow a business expense because the records provided did not establish that it was deductible. Additional documentation may help explain the expense and support your position.
In other cases, the disagreement may involve a more complicated tax issue that requires legal analysis.
If the IRS does not agree with your response, you may have the right to pursue an administrative appeal. The available process depends on the type of examination and the stage of the case.
What Is an IRS Tax Appeal?
An IRS appeal is a process for challenging a tax dispute without immediately taking the matter to federal court.
The IRS Independent Office of Appeals generally provides taxpayers with an opportunity to resolve disputes with the agency’s examination or collection functions. Appeals officers are separate from the IRS employees who originally examined the return, although they remain part of the IRS.
An appeal may involve disagreements about the amount of tax owed, penalties, deductions, credits, or other issues raised during an examination.
Not every tax dispute follows the same procedure. Deadlines and appeal rights can depend on the notice you received and the type of IRS action involved.
If you receive a notice explaining your appeal rights, pay close attention to the deadline. Missing a deadline can affect the options available to you later.
How Do I Appeal an IRS Audit?
If you disagree with the results of an IRS audit, the first step is to understand exactly what the IRS changed and why.
The IRS generally provides an explanation of its proposed adjustments and information about your rights to challenge them. Depending on the case, you may be able to request an administrative appeal and present your position to the IRS Independent Office of Appeals.
An effective appeal should be more than a statement that you disagree. It should identify the specific issues in dispute and explain why the IRS’s position is incorrect. Supporting documents, tax research, and other evidence can help establish your position.
You may also need to address several issues at once. For example, an audit could result in changes to income, deductions, and penalties. Each proposed adjustment should be reviewed rather than treating the additional tax as one unexplained amount.
What If the IRS Says I Owe More Taxes?
An audit can result in additional tax, penalties, and interest if the IRS determines that your return understated your liability.
That does not necessarily mean you should immediately agree to the assessment. Review the proposed changes first. An adjustment may be based on incomplete information, a misunderstanding of the facts, or a disagreement over how a tax rule applies.
If the proposed assessment is accurate, you may need to address the resulting balance. Depending on your circumstances, options may include an installment agreement or an Offer in Compromise.
If you dispute the assessment, the focus may instead be on challenging the audit findings through the appropriate appeal process.
What Documents Do I Need for an IRS Audit?
The records you need depend on what the IRS is examining. Your audit notice should identify the items under review and the documentation requested.
Depending on the circumstances, useful records may include:
- W-2s, 1099s, and other income records
- Bank and credit card statements
- Business invoices and receipts
- Brokerage and investment statements
- Real estate records
- Contracts and other records supporting disputed transactions
Keep copies of everything you provide to the IRS. If you are working with a tax attorney, organizing the records before responding can also make it easier to identify gaps or inconsistencies.
How Can a Frederick Tax Attorney Help With an IRS Audit?
An IRS examination can become difficult when the questions involve complicated transactions, business records, or disagreements over the tax law.
Gabaie & Associates can help taxpayers understand the issues being examined and develop a response based on the records and applicable tax rules. Depending on the case, assistance may include:
- Reviewing the audit notice and IRS correspondence
- Identifying the issues under examination
- Reviewing tax returns and supporting documentation
- Organizing records requested by the IRS
- Responding to IRS information requests
- Communicating with the IRS examiner
- Reviewing proposed tax adjustments
- Challenging inaccurate or unsupported findings
- Requesting penalty relief when appropriate
- Evaluating administrative appeal options
- Representing you before the IRS Independent Office of Appeals
- Discussing tax resolution options if additional tax is ultimately owed
Having representation can also allow the attorney to communicate with the IRS on your behalf rather than requiring you to handle every request or meeting yourself.
Do You Need an IRS Audit and Appeals Attorney in Frederick?
If you are facing an IRS audit or disagree with the results of an examination, Gabaie & Associates can review the matter and explain your options.
The firm has a Frederick office at 5100 Buckeystown Pike, Suite 250A, Frederick, MD 21704. Juda Gabaie represents taxpayers before federal and state tax authorities and is admitted to the U.S. Tax Court and Maryland Tax Court.
Whether you have just received an audit notice, are responding to questions from an IRS examiner, or are considering an appeal of proposed changes, getting advice before agreeing to the government’s position may help you protect your rights.
Call Gabaie & Associates at (410) 358-1500 or contact the firm online to discuss your IRS audit or appeal.
Frequently Asked Questions About IRS Audits and Appeals in Frederick
Does an IRS audit mean I did something wrong?
No. An audit means the IRS is reviewing information on your tax return. The examination may result in no changes, proposed changes, or a change in the amount of tax you owe.
Can I refuse an IRS audit?
Ignoring an audit notice generally will not make the examination go away. If you do not respond, the IRS may make a determination based on the information available to it. If you have concerns about the audit, consider getting professional advice before responding.
How long does an IRS audit take?
The length of an audit varies depending on its scope, the complexity of the issues, how quickly records are provided, and whether disagreements arise over the proposed changes.
What happens if I disagree with the audit results?
You may have the right to challenge the proposed adjustments and request an administrative appeal. Your options and deadlines depend on the type of examination and the notice you receive.
Can a tax attorney represent me during an IRS audit?
Yes. A tax attorney may be able to communicate with the IRS, respond to information requests, help prepare documentation, and represent you during applicable stages of an examination or appeal.
Get Help With an IRS Audit or Appeal in Frederick
An IRS audit does not automatically mean you owe additional taxes, and disagreeing with the IRS does not necessarily mean your only option is to go to court. Depending on the circumstances, you may be able to resolve the examination directly with the IRS or pursue an administrative appeal.
If you received an IRS audit notice or disagree with proposed changes to your tax return in Frederick, call Gabaie & Associates at (410) 358-1500 or contact the firm online to discuss your situation.
