Finance Tax Time

There was once a song about battling the law and losing. Fortunately, battling the IRS is possible and sometimes inevitable.

Battling the IRS

There comes a time when many Americans must take action against the IRS. The IRS can come down swiftly and without mercy against taxpayers for issues ranging from simple mistakes to genuine tax evasion. When such a situation occurs, usually in the form of an audit and followed by possible federal prosecution, it becomes necessary to stand up to the IRS. As many experts will tell you, knowing the right steps to take and doing things the right way can actually make battling the IRS prove to be a very valuable thing.

Every year, honest, tax-paying Americans worry that their income tax return will end up being audited by the IRS. In fact, the number of audits has increased quite significantly in recent years, lending its hand even further to the worry and stress. Audits can lead to major fees and even criminal prosecution. Needless to say, such a situation can become ugly very quickly.

However, many Americans don’t realize that they can fight the IRS. And, not only can they fight, but often times they can emerge with some sort of victory. In fact, recent studies have shown that over 41% of Americans who took their cases to the IRS’s appeals division won at least some degree of relief, while others had their penalties wiped out completely. Not only this, but countless numbers of other Americans have fought cases against the IRS in district courts and also emerged victorious.

What this means for the average American is that the IRS shouldn’t worry you too much. Obviously, an audit can be very scary and can occur at any time. However, as long as you did file your taxes in honesty, they are many venues you can look to for help. Just do some research, online or offline, and find a good tax lawyer to represent you. Whatever steps you take, do NOT talk to the IRS yourself. Your statements are evidence against you and you may inadvertently provide evidence the IRS has no right to obtain.

You will be surprised at your own chances of defeating the IRS and having your penalties reduced or even eliminated. Battling the IRS is something that can prove to be a very valuable tool for many Americans looking for tax relief.

Richard A. Chapo is with BusinessTaxRecovery.com - providing information on taxes.

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It’s a moment every person dreads. You pick up the mail and there is an envelope from the IRS. It’s not a refund check. What do you do?

Don’t Panic

Each year, the IRS sends out millions of “correspondence audits” to taxpayers to request payment of taxes, notify them of a change to their account or request additional information. These audits normally cover a very specific issue, often notifying you of additional small amounts of income for which you owe tax. Each letter and notice provides specific instructions explaining what you should do if action is necessary to satisfy the inquiry.

Most correspondence can be handled without calling or visiting the IRS. You simply follow the instructions in the letter and the matter is put to rest. Alternatively, you can contact the IRS to contest the matter. Simply call the telephone number indicated on the letter or write an explanation as to why you disagree. Make sure to include copies of any supporting documentation you want considered by the IRS. Typically, it will take the IRS between one and two months to respond. During the first quarter of the year, it can take two to three months.

Sometimes, the IRS sends a second letter or notice requesting additional information or providing additional information to you. Be sure to keep copies of any correspondence with your records. The IRS has been known to lose track of actions involving a taxpayer’s account.

Worse Case Scenario

Everybody has a few really bad days in his or her life. You know, the car breaks down, you spill coffee on your shirt while driving to workyou get notice of a full blown audit from the IRS. The first step you take should not be drinking to excess or driving for the border. You have rights when the IRS comes calling and one of them is particularly important.

Representation

You have the right to be represented by an accountant or attorney at your audit. Under no conditions should you even consider going to an audit by yourself. Doing so would be like throwing red meat to a lion. Instead, spend the money to get representation and let them handle the audit. In most cases, you won’t even have to go to the audit.

Nightmarish tax audits are generally a thing of the past. A letter from the IRS should not cause you to faint. Usually, the news isn’t that bad. If it is, hire representation and let them handle it.

Richard Chapo is CEO of http://www.businesstaxrecovery.com - Obtaining tax refunds for small businesses by finding overlooked tax deductions and credits through a free tax return review.

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Tax cheaters. Offshore trusts. Tax-avoidance scheme operators. Individual taxpayers.

All have been targets of the IRS in what has become an aggressive war over tax compliance.

In fact, over the last few years, the IRS has established unlikely allies to combat the growing threat of tax cheaters. MasterCard is even in cahoots with the taxman.

If you’re a tax cheater and you’ve survived this long, consider yourself lucky.

A timeline of the war:

November 2003: The U.S. Senate Finance Committee holds hearings examining tax shelter abuses. Among those to testify is a man with his identity and voice disguised to protect him from retribution.

December 2003: The U.S. Justice Department files a lawsuit against Big Four accounting firm KPMG LLC, alleging that the company has obstructed the IRS’s investigation of illegal tax-avoidance schemes allegedly promoted by KPMG.

January 2004: IRS Commissioner Mark W. Everson promises more audits.

April 2004: U.S. Justice Department reports a 35 percent increase in the number of tax cheaters referred for criminal prosecution.

May 2004: IRS announces June deadline for taxpayers to come forward if they have employed the “Son of Boss” tax shelter.

June 2004: Through partnerships with 48 states and the city of New York and the District of Columbia, the IRS identifies 28,000 possible tax cheaters.

July 2004: 1,500 taxpayers come forward and admit to using “Son of Boss.”

December 2004: Chemical giant Hercules settles a case with the government in which the IRS alleged that Hercules employed an illegal tax shelter. The company agrees pay $30 million, plus a penalty of about $6 million.

February 2005: IRS identifies dozens of executives, 42 corporations, and more than $700 million in stock options related to a tax-avoidance scheme. Government offers deal: Come forward to avoid criminal prosecution.

April 2005: IRS obtains more than 100 injunctions against promoters of tax-avoidance schemes.

June 2005: U.S. Tax Court threatens to impose fines of up to $25,000 for people bringing frivolous tax-avoidance claims.

July 2005: IRS reports $4 billion in settlements from “Son of Boss.”

December 2005: IRS reports enforcement revenues are up 10 percent to a record $47.3 billion.

January 2006: Richard Hatch, who won $1 million on the original Survivor, is convicted on tax evasion charges.

February 2006: Will you be the IRS’s next target?

Darrin T. Mish is an Attorney who practice focuses on representing clients across the United States with IRS Problems.He is a member of the American Society of IRS Problem Solvers and the Tax Freedom Institute. He can be reached at his website at http://www.getIRShelp.com

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