Question

In: Accounting

Discuss your considered understanding of your taxpayer-client’s options in the face of an unhappy IRS audit...

Discuss your considered understanding of your taxpayer-client’s options in the face of an unhappy IRS audit result.

Solutions

Expert Solution

Taxpayers should understand that an audit in no way implies suspicion of criminal activity. Tax returns are complicated documents carrying financial data that must be evaluated to confirm accuracy.

The audit process is known as an examination and does not imply that you have intentionally made an error. In fact, the IRS contacts individuals for a variety of reasons.

Taxpayers are chosen through a “random selection and computer screening” process, according to the IRS, that is based on a statistical formula. The IRS compares tax returns against “norms” for similar returns. If your return doesn’t follow the “norms” you may be chosen for an audit.

If your tax filing includes transactions with other taxpayers, such as business partners or investors, and they were audited, you also may be audited.

If you are being audited, the IRS will contact you by mail or telephone, not by email. Included in the notice will be the specific information that is to be examined and what supplementary documents you may need to present.

You have 30 days to respond to an audit notice. Do not put off your response, as the time you spend ignoring a letter can be time that interest builds on the amount you owe the IRS.

Before an audit, you need to get your paperwork ready, seek to understand what the problem is and determine if you want representation.

Gather the forms the IRS has requested. You will want to make sure you have copies, not originals. Organize your paperwork, and make sure the documents you have match up with the year that is under audit. If you realize you have misplaced certain records, immediately call and request that duplicates be sent to you.

At the same time, you have rights and deserve fair treatment. Here are your taxpayer rights during the audit process, according to the IRS:

  • A right to professional and courteous treatment by IRS employees.
  • A right to privacy and confidentiality about tax matters.
  • A right to know why the IRS is asking for information, how the IRS will use it and what will happen if the requested information is not provided.
  • A right to representation, by oneself or an authorized representative.
  • A right to appeal disagreements, both within the IRS and before the courts.

Related Solutions

Auditing Audit planning is the first step in the audit process. It includes understanding the client’s...
Auditing Audit planning is the first step in the audit process. It includes understanding the client’s business and industry and performing preliminary analytical procedures to assess client business risk and other kinds of risks that could affect the audit process.  Describe the importance of audit planning and how it affects the remaining of the audit process. ( In a paragraph form if possible ,would be great to answer it ).
Discuss your considered understanding of the relationship between Code § 6664(c) and the relevant / corresponding...
Discuss your considered understanding of the relationship between Code § 6664(c) and the relevant / corresponding provisions of Circular 230.
Your client has received a notice from the IRS. Your client is a high-income taxpayer, active...
Your client has received a notice from the IRS. Your client is a high-income taxpayer, active in rental real estate, and is also a partner in several business partnerships. Provide a brief (one page or less) overview of what your client should expect from the audit process, including important milestones, deadlines, and tips. You may also discuss IRS practices and procedures, audit methods, and anything else you believe to be noteworthy. Assume your client has contacted you and asked you,...
Discuss the advantages and disadvantages from a client’s perspective of engaging its auditor to perform non-audit...
Discuss the advantages and disadvantages from a client’s perspective of engaging its auditor to perform non-audit services in addition to the audit. (NB. Do not discuss this from the auditor’s perspective, discuss this from the client’s perspective).
Your audit team is preparing for your largest manufacturing client’s annual inventory observation. You have all...
Your audit team is preparing for your largest manufacturing client’s annual inventory observation. You have all first-year staff auditors on your team. Prepare a training presentation to discuss specific analytical procedures and substantive procedures that are required to ensure the results of the inventory observation will properly support your firm’s opinion that the inventory account meets all the client’s assertions. Be sure to include common errors that can be noted during the inventory observation and how these can be eliminated....
Discuss the real-time audit process for companies and how the IRS can monetize this program. Since...
Discuss the real-time audit process for companies and how the IRS can monetize this program. Since 2011, the IRS has put into place the Compliance Assurance Process, which provides companies the opportunity to be placed into a real-time audit process. This process allows companies to be constantly audited in real time, rather than being audited two or three years in arrears. Surveys have shown that companies love this program, as it relieves a company of stress from going back and...
Define and discuss the factors to be considered in designing a sample for audit testing. Explain...
Define and discuss the factors to be considered in designing a sample for audit testing. Explain how the auditor will know if the sample is representative
Discuss 1: Your understanding of the accounting side of payroll 2: Your understanding of the tax...
Discuss 1: Your understanding of the accounting side of payroll 2: Your understanding of the tax side of payroll 3: What's the two major general journal related to payroll 4: sharing payroll working experience here.
Discuss the importance of understanding internal control in developing an effective audit program. In that context,...
Discuss the importance of understanding internal control in developing an effective audit program. In that context, include in your discussion a general overall position and specifically the internal control questionnaires for either the Revenue and collection Cycle or Production (Inventory) Cycle, which also includes internal control over Inventory Transaction Processing. Matters such as seperation of duties should be part of your response. Include in your answer several (3 would be enough) important considerations to satisfy sound internal control for each...
1.)Discuss the audit issue in each case that has to be considered and what impact these...
1.)Discuss the audit issue in each case that has to be considered and what impact these issues would have on the audit opinion. Use relevant standards to answer to question. a.) Company A uses the last-in first-out inventory valuation method for its closing inventory, which is a significant item found in its statement of financial position. The difference between first-in first-out and last-in-first-out has a material effect on the closing inventory balance. b.) Company A is a parent company owning...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT