How the IRS Audits Income for Cash Businesses

Michigan Income Tax Audit Defense Attorney

If you’ve been selected for an income tax audit, it’s wise to consult a tax attorney to make sure there are no surprises in the process and that you are doing everything possible to bring about a favorable resolution.

The prospect of an IRS income tax audit can be worrying. Rather than trying to handle an audit on your own, turn to professionals who can work with you during this stressful process. A Michigan tax audit attorney at Ayar Law will advise you every step of the way and help you gather the information requested by the IRS or Michigan auditors.

Income Tax Audit

The IRS conducts audits to determine whether the taxpayer has reported income correctly and taken deductions for which they are eligible. It is the taxpayer’s responsibility to prove the filing was correct, and that means providing supporting documents. In general, the IRS can go back three years with audits. Keep in mind there is no limit on the number of times the IRS can audit a taxpayer or business.

When you receive notice of an IRS tax audit, that means the IRS has found discrepancies or potential problems in your personal or business tax returns. Only about 1 percent of personal income tax returns are audited annually, and most of these involve correspondence via the mail. If selected for a correspondence audit, the matter is often resolved by supplying the IRS with the documentation requested. You may not need a tax audit attorney for this type of audit.

When the IRS requests an in-person audit, either at your home, place of business, or an IRS field office, you definitely need the expertise of an income tax audit lawyer. Such audits are likely to go into greater depth and require more documentation. They are complicated and time-consuming.

Michigan Income Tax Audit

The Michigan Department of the Treasury has the authority to conduct Michigan tax audits in the Wolverine State. The taxpayer first receives a Determined Audit Adjustment letter, which includes the information substantiating the audit determination. If the taxpayer agrees with the amount due, they must submit payment by the due date listed. If they disagree, they must contact the auditor by the date specified in the DAA letter. They should also consider obtaining counsel from a tax audit defense lawyer.

Audit Defense

When you have an income tax audit defense attorney on your side, you are much more likely to obtain a favorable outcome than if going it alone. An audit defense attorney is well-versed in how the IRS or the Michigan Department of the Treasury works. You do not want to risk your future or that of your business by dealing with the IRS by yourself.

An audit defense lawyer will deal with the audit situation from start to finish. Recommended actions may include appealing the IRS or state decision, if appropriate.

Learn more about appealing an IRS audit by contacting a Michigan tax audit attorney at Ayar Law.