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The IRS may choose to audit anyone, but there are typically red flags that draw their attention and trigger a review of your finances. While some audits are easily resolved by sending additional documentation, others are long, stressful ordeals that often require the expertise of a tax law attorney. Fortunately, many audits can be avoided if you know what the IRS is looking for.

How Does the IRS Choose Who to Audit?

1. Discrepancies in Reported Income

The IRS has powerful software that automatically compares the income reported on your returns with payments reported by other business entities. Forgetting to include a source of income or even simple mathematical errors can cause the system to select your returns for review by an IRS employee, who may decide to initiate an audit.

2. Previous Audits or Tax Issues

tax lawIf you were previously audited or the IRS suspected you were attempting to hide assets in the past, your chances of being selected again increase. Having a tax law attorney represent your interests during an audit can minimize the effect by finding a solution that minimizes your chances of being selected again.

3. Claiming Certain Deductions

The IRS knows that certain deductions are more likely to be abused, so excessive write-offs can trigger closer scrutiny of your returns. The deductions for home office expenses, charitable donations, and business losses are common grounds for audits if the amounts seem excessive or unusual.

4. Connection to Another Entity Being Audited

In some cases, being chosen for an audit may have nothing to do with your own finances or returns. The IRS often audits businesses that have worked with other companies who are under audit, simply due to the financial connection. This can be especially frustrating, but a tax law attorney can make the experience as fast and stress-free as possible.

 

If the IRS has singled out your business for an audit, let the attorneys at Morrow, Gordon & Byrd, Ltd. guide you through the process and represent your interests. They’ve been serving businesses throughout New Albany and Westerville, OH, since 1933, earning a longstanding reputation for attentive service and reliable results in a variety of situations. To learn more about their tax law services and schedule a consultation, visit their website or call (740) 345-9611, and follow their Facebook for more legal tips and insight.

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