We represent in, assist with, and defend against federal and state income tax audits for both, individuals and business entities.

IRS Examination (Audits)______________

We represent individuals and business entities in income tax examinations (audits) before the IRS.

State Tax Audits____________________

We represent taxpayers in any state in which the taxpayer faces a state income tax examination.

Income Tax Audit

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FAQ-Income Tax Audits

  1. Correspondence Audit: Correspondence audit are normally for common errors such as math errors and missing schedules. The audit is done by mail. This type of audit tends to happen because there is a difference in your tax return versus third party documentation.
  2. Office Examination: Taxpayer or her represents go to the IRS’ premises for audit. Normally, the auditors will only examine significant items on your tax return. It is normally good to consult a tax professional to help you prepare for this type of audit or to conduct the audit for you.
  3. Field Examination: Audits that are conduct by more experienced IRS agents, usually at the taxpayer’s place of business or residence or taxpayer’s representative’s office. Typically, these audits are the most serious types of audits. For the majority of these audits, a lay persons should not conduct alone and should see the assistance of a tax professional with audit experience.
DIF stands for Discriminant Function System. DIF is a computer program the IRS uses to give each income tax return a score. The score is called the DIF score. Basically, the DIF score is a number that statistically determines the possibility of the tax return being accurate. The higher the DIF score that is assigned to a tax return, the higher the chances of the tax return being audited.IRS DIF Computer Program

UIDIF stands for Unreported Income Discriminant Function. UIDIF is a computer program the IRS uses to rate a tax return on it’s potential to have unreported income. The UIDIF scores taxpayers based on an expense and income ratio. Using its UIDIF program, the IRS is trying to see if a taxpayer is spending more money than she makes as reported on her income tax return. If UIDIF scores taxpayer as spending more money than the income she reported, IRS may believe that it is likely that taxpayer has other unreported income.

IRP stands for Information Returns Processing System. IRP is a computer system used by the IRS to store massive amount of data provided by third parties such as employers, vendors, brokerage firms, banks, escrow companies, and SSA, etc. The IRS compares a taxpayer’s income tax return against information in its IRP. If taxpayer failed to included in his tax return income showing in the IRP for taxpayer, the IRS will likely audit the taxpayer.IRS IRP vs Tax Return

What Is A Statute of Limitations?

A statute of limitation is a time period established by law to review, analyze and resolve taxpayer and/or IRS tax related issues.

IRS’ statute of limitations, also known as Assessment Statute Expiration Date (“ASED”), ranges from 3 years, 6 years, or indefinitely depending upon the circumstances of the tax return.

Which Statute of Limitations Apply To a Tax Return

Return # Description Statute of Limitation
Tax Return 1 This is the default or standard amount of time that the IRS has to legally audit most income tax returns.  (3 Year Period applies if you do not have filed Tax Return #2 or Tax Return #3 below described.) 3 Year Period
Tax Return 2 For a tax return filed with income understated by 25% or more, the state of limitation to audit this return may be extended by an additional 3 years. 6 Year Period
Tax Return 3 For a tax return filed with the intent to commit fraud, the IRS can extend the statute of limitations indefinitely.  In other words, there is no statute of limitation for filed tax return that the IRS can prove tax fraud. Unlimited Time Period / No Statute Applies

Calculating Statute of Limitations Using

To calculate the statute of limitation, you start with later of the tax returns original due date or actual filing date. Then, you count forward either 3 years or 6 years, assuming your tax return has a statute of limitations.

Example 1 Using 3 Years: For a tax return that was due on April 15, 2013, but filed on February 7, 2014, the statute of limitations expires on February 7, 2017.

Example 2 Using 6 Years: For a tax return that was due on April 15, 2010 and filed on January 17, 2010, the statute of limitations expires on April 15, 2016.

Example 3 Using 3 Years: For a tax return that was due on April 15, 2008 and filed on April 15, 2008, the statute of limitations expires on April 15, 2011. IRS Statute of Limitation Chase