Colorado Springs: What Could Cause My Tax Return to Be Audited?

There is nothing more frightening than opening your mailbox and finding a letter that has "Internal Revenue Service" in the return address section of the envelope.  Any number of questions will go through your mind: "What did I do wrong?"; "Did my tax professional make a mistake?"; or "Did I forget to report some income?"

While each of these questions are important to you, the reason for the IRS letter can range a a typo to non-cash contributions to foreign forms.  How can you as a taxpayer be prepared just in case a letter requesting verification of something on the tax return arrives?  Advance preparation and documentation is always the best.  Some of the biggest issues are non-cash contributions. If you are donating an item of significant value, an appraisal is always the best way to ready for the documentation request. You can even include the appraisal with the tax return.

Consistent losses on Schedule C can also trigger an audit.  You really need to keep good documentation of your efforts to make a profit.

I have only briefly covered two of the reasons why your return may be audited.  In all events it is best to always have the documents easily accessible for the positions you are taking on your tax return, just in case.  Prompt and thorough responses to the IRS are always best. 

An Enrolled Agent can represent you before the IRS in these cases to reduce your anxiety and worry of dealing with the IRS on your own.

Cash Tracks Financial of Colorado Springs

Marcelino Dodge, EA, CTRC

525 N Cascade Ave., Suite 200

Colorado Springs, CO 80903

(719) 359-8789

www.cashtracksfinancial.com

success@cashtracksfinancial.com

Colorado Springs: Can I Appeal This IRS Collections Notice?

Few pieces of mail cause as much stress as a certified letter with the Internal Revenue Service in the return address area.  Then, when you open the letter you see a large balance due that you did not expect.  What can you do to navigate this challenging situation?

1. Hire a tax professional: An Enrolled Agent (EA) can represent you before the IRS, review your tax records, and provide expert guidance on how navigate the appeals process

2. Understand the Notice: An Enrolled Agent will carefully read the collections notice and help you to understand the amount owed, the reasons behind it, and the  deadline for responding, which is crucial to avoid further penalties.

3. Gather Documentation: An EA will help you to identify the relevant documents, including tax returns, payment records, and any correspondence with the IRS. The proper documentation is essential to building a case with the IRS.

4. File a Written Protest: After careful review of all the information and if you disagree with the notice, an EA will prepare to file a written protest.  The protest will clearly state the reasons for disagreement and provide supporting evidence.  The more comprehensive the protest the better.  Make sure the protest is timely filed. 

5. If Needed, Request an Appeals Conference: An EA can represent you in an appeal conference. The IRS Independent Office of Appeals operates separately from the collections division and aims to resolve disputes impartially. During the conference, your EA will present your case and any additional evidence.

6. Explore Alternative Solutions: If appealing the notice is not feasible, explore other options like installment agreements or an offer in compromise, which allows you to settle your tax debt for less than the full amount owed. 

Cash Tracks Financial of Colorado Springs

Marcelino Dodge, EA, CTRC

525 N Cascade Ave., Suite 200

Colorado Springs, CO 80903

(719) 359-8789

www.cashtracksfinancial.com

success@cashtracksfinancial.com

Colorado Springs: Can I Challenge a Bad IRS Tax Assessment?

 

Nothing causes worry and stress more than receiving a piece of mail with the Internal Revenue Service as the sender.  Then, after you open the piece of mail to your surprise the IRS is assessing you tax and penalties on income that you are not even sure is income you earned.  What do you do?

Step one is to contact a tax professional to help you sort through this and determine if the assessment is even correct.  Marcelino Dodge, EA, CTRC will assist you in determining if the assessment is correct

Next, if it is determined the tax bill is wrong, contacting the IRS to discuss the issue will sometimes resolve misunderstandings or errors. If the initial contact does not resolve the issue, a formal challenge the assessment would be next.

Taxpayers have the right to request a review of the penalty before it is assessed. If the penalty has already been assessed, Marcelino Dodge, EA, CTRC  can help you request a penalty abatement either before or after the penalty is paid.

If the abatement request is denied, you can appeal the decision. An appeal is sent in writing to a different IRS office.  This written request for consideration by IRS Appeals is an impartial reconsideration because your request is being seen in an IRS office that did not initially review your case.

Should the appeal not resolve the issue, the next option is to take your case to Tax Court.  Sometimes though after you file the petition to Tax Court, your case may be settled before even going to court.  If you do go to court and the court finds in your favor and determines that the IRS’s position was largely unjustified, you may be eligible to recover some of your administrative and litigation costs.

Navigating any tax dispute can be complex, so it’s helpful and recommended to consult with a tax professional who can provide guidance tailored to your specific situation. Remember, you have rights and options to ensure fair treatment by the IRS.

Cash Tracks Financial of Colorado Springs

Marcelino Dodge, EA, CTRC

525 N Cascade Ave., Suite 200

Colorado Springs, CO 80903

(719) 359-8789

www.cashtracksfinancial.com

success@cashtracksfinancial.com