Accurate IRS Examinations for IRS Levy in Houston, TX
So you have received a letter from the Internal Revenue Service stating, “We have selected your federal income tax return for the year shown above for examination. We examine tax returns to verify the correctness of income, deductions, exemptions, and credits.” Stay calm; no need to panic. It’s not an IRS levy in Houston, TX. You have just been selected for one of their many tax examinations or audits conducted throughout the year.
What is a Tax Examination?
Also called a tax audit, this is an examination or review done by the IRS on an individual’s or organization’s accounts and financial information to ensure that information is correctly reported. Being selected for an audit does not always mean there is a problem because the selection can be done through a random sampling method. Depending on the nature of the audit, the examination may be done by mail, at the business or in the field.
What Happens During a Tax Audit?
In most cases, the IRS will look at your reported income by making an initial examination of your financial statements, bank deposits and other investments. A red flag may be raised if there is a discrepancy between the income you reported and your total deposits. If the discrepancy is less than 25%, the IRS has up to three years to determine if you made a mistake on your field tax return. However, if the discrepancy is more than that, the IRS has up to six years to make an examination. The IRS will not have a statute of limitations to examine your return if you did not file a tax return or if you filed a fraudulent report.
Getting a letter from the IRS about an audit scares most people. But, if you prepare yourself and have all the necessary documents to back your case up, then the examination process will be less taxing. Nevertheless, while most tax audits are not serious, it is still best to seek the advice of experts.
Bobino Tax Consulting Services can assist you with your IRS examination. When the process becomes quite complex or when there is so much at stake, we can take the lead and do direct interactions with the IRS; otherwise, we can stay backstage and provide pieces of advice to help ensure a hassle-free tax audit.