Should the IRS decide to audit your tax return, you will need your copy of the return to confirm that you filed and it was done correctly. If you have filed correctly and have your copy you should have nothing to worry about.
In most cases of an audit, the IRS may only go back three years. There are, however, special circumstances in which the IRS can go back as much as ten years. And if you fail to file, they have no limit on how far back in time they can go.
The best way to avoid difficulty with the IRS is to have a knowledgeable tax expert prepare your taxes for you. Be sure to provide the preparer with complete and correct information. Remember that it is your tax return. Go over your return carefully before signing and filing with the IRS. Tax Crisis Institute has tax preparers who can take care of your filing for you. They are also better able to assist you in navigating through an audit.
Why Do I Need To Keep Tax Records?
According to IRS records, only about 0.4% of private taxpayers were audited in 2019. Assuming there are no irregularities in your return, the IRS can legally go back up to three years from the date you filed or two years after you paid your taxes. Within that time they can audit and, if applicable, assess additional taxes, penalties and interest.
In the event you are audited you will need the supporting documents for your tax filing. Even though a reliable tax preparer will keep copies for a short period of time, you will be better prepared if you retain copies of your returns and supporting documents for at least seven years.
When Can The IRS Go Back More Than Three Years?
While three years is the time limit set for the IRS to initiate an audit, there are exceptions. If you are confident with your filing, you should only need to keep tax information for three years. However, you might want to keep your records longer just in case the IRS has questions later.
If you fail to report over 25% of your income, the IRS can go back six years. The IRS also gets six years if you fail to report certain foreign income. Failure to file necessary forms also extends the audit time to up to ten years. Should you discover an error after filing you, or your tax preparer, can, and should, file an amended return at that time.
If you choose not to file, you’ll need to keep financial information indefinitely. Because if you choose not to file, there is no limit on how far back the IRS can go in auditing you. If you need help filing, Tax Crisis Institute has qualified professionals who can help you with your tax difficulties.
Once the audit is performed, the IRS has up to ten years to collect the taxes you owe. During that time, penalties and interest continue to add up.
How Does The IRS Choose Individuals For Audit?
An audit is only a review of your tax return. Just because you are notified that the IRS will audit, or review, your return does not necessarily mean they have found something wrong with it. Some of the reasons an account is audited follow.
- The IRS may select your tax return for research purposes to compare similar returns in order to establish statistical norms.
- If your return falls outside established statistical norms that may trigger an audit.
- If what the IRS receives from you does not match with what it has received about you from other sources, that can trigger an audit. Be sure to report all income you receive including all W-2’s and 1099’s.
- Sometimes the IRS is auditing an individual or company that has an association with you and your return will be selected to include in the audit.
Regardless of the reason, remember that it begins just as a review. If you are selected for an audit, the IRS will notify you by mail. Do not respond or give information to a phone solicitor claiming to be with the IRS. If you did not use a professional tax preparer, you may want to confer with a specialist when confronted with an audit. A professional will be better able to assist you in responding to the IRS
Does My Tax Preparer Have To Keep Copies?
A licensed tax preparer is required to keep records for three years. If a mistake occurs you will bear full responsibility for any additional tax. Occasionally the preparer can have responsibility for penalties and interest. A reputable tax preparer may offer to pay penalties and interest to the client or negotiate with the IRS to have them abated. However, don’t assume anything. And carefully go over your return before signing and filing it with the IRS.
When selecting a tax preparer, be sure to identify their qualifications.
- Confirm they have a Preparer Tax Identification Number.
- Look for a CPA, a degree in law, or an Enrolled Agent Designation.
- Ask about their policy if they make a mistake.
- For obvious reasons, you might want someone who charges a flat fee rather than taking a percentage of your return.
Even if you are sure of your return and you have all your supporting documents, you may not want to face the IRS alone. Contact the professionals at Tax Crisis Institute for a free consultation. Let them use their experience and knowledge in dealing with the IRS. They will make certain you are not liable for more than you owe.
Maybe you are not facing an audit at this time. But it is time to get tax information together and compute last year’s taxes–or turn it all over to someone else to sort through. Contact Tax Crisis Institute, the company with over 30 years of experience You can be assured everything will be in order and you will not pay more than is necessary.
Tax Crisis Institute has been a tax relief leader for over 30 years. When you work with the Tax Crisis Institute, we’ll make sure you don’t pay anything more than you owe!
Call Tax Crisis Institute today for a FREE consultation!