The audit type that likely comes to mind is the much more complicated face-to-face interview. The IRS will mail an official notice requesting specific answers and documents to support a triggering detail within your filed return. Examples include income, deductions, or a tax credit. When exchanging documents with the IRS, be sure to include an explanation of how each item supports your filed return.
If you disagree with the IRS decision on your return, including any proposed penalties, you may be able to file an appeal with the IRS. We cannot emphasize enough the need to respond to all requests for information from the IRS. Appeals must also be filed according to the deadline established by the IRS.
If you miss these important deadlines, the IRS can charge you taxes. Or worse, you could possibly lose your right to appeal. Filing for an extension is a great option for those who find themselves unable to provide all documentation before the IRS deadline. This option is a protective measure to offset additional taxes and penalties that you could be charged. You may also want to find some expert help to weigh your options as this process can become complicated.
Audits that occur within an IRS office are called the office audit or desk audit. Office auditors, called tax examiners , focus on specific items on the questionable tax return.
Revenue agents review all business types in the field including high net-worth taxpayers with complicated returns. Examples include employer returns, estates, trusts, and international filings. Office and field audits are a mystery to many. If you are subject to a face-to-face audit, there are four basic phases to expect:. Taxpayers whom are obstructive could face higher penalties should it be found that an understatement occurred. You can expect an Audit Findings Letter indicating the findings of the audit once completed, unless you waive the right to receive such letter.
Kindly note that the Audit Findings Letter does not apply if SARS is of the view that it will impede or jeopardise the outcome of the audit. The response to the Audit Findings Letter will be considered in determining whether the proposed audit findings should remain or not. If SARS is still of the view that a revised assessment must be done; or where the taxpayer chose not to respond to the Audit Findings Letter, the imposition of understatement penalties must be considered.
Thereafter a revised assessment will be raised. A Notice of Assessment and a Finalisation of Audit Letter detailing the grounds of the assessment including amounts will be issued via eFiling, email or post. Any refund due to you will be paid out after the completion of the audit, subject to specific refund validations being passed. An assessment may also result in tax owing to SARS.
The payment due date of such debt will be stipulated in the Notice of Assessment. A SARS assessment normally becomes final within 3 years from the date of assessment non-self-assessment taxes like Income Tax or five years from date of assessment self-assessment taxes like Value Added Tax. If no finding was made as result of the audit or SARS conceded based on the response by the taxpayer to the Audit Findings Letter, a Finalisation of Audit Letter will be issued via eFiling, email or post.
If you are aggrieved by the original assessment based on an estimate, you can submit the complete and correct return within 40 business days from the date of assessment. At all times, during verification or audit, the taxpayer can approach the Voluntary Disclosure Unit to make a voluntary disclosure.
Refer to the Voluntary Disclosure programme for more guidance on that process. Businesses and Employers. Tax Practitioners. Customs and Excise. Being Audited or Selected for Verification. What is verification?
Who can be selected for verification? What steps should I take if I am selected for verification? A RFC must be submitted if you wish to change your original declaration. The link to upload relevant material on eFiling is only available upon receipt of the letter requesting the relevant material refer to the relevant guides on eFiling : Upload all the relevant material as requested in the above-mentioned letter.
It is therefore important that you click submit ONLY when all documents have been uploaded. Make sure the original letter sent by SARS is included when you submit relevant material on the SARS Online Query system or via the branch, as it contains a unique bar-coded reference that links the uploaded relevant material to your tax records.
Ensure that the following standards are adhered to when relevant material are uploaded: The file type may be. The maximum allowable size per document is 5MB and a maximum of 20 documents may be uploaded.
What can I expect during the verification? If you are subject to a verification, we will endeavour to: Notify you that the return or declaration is subject to verification.
Conclude verification within 21 business days from the date all required relevant material is received, if your return is for the current filing period. If you have a refund due, the refund will not be paid out while the verification is in progress. What if I do not respond to the request for relevant material? What can I expect when the verification is finalised? The next step will involve the IRS focusing on a few key issues regarding your situation. This could also lead to more IDRs and office interviews.
Once all of these processes are complete, you might end up having to pay adjustments on your tax return and possibly even penalties. Like an office audit, a field audit is another type of face-to-face audit and it can be even more intrusive because it will take place in your home or business. For example, it might be necessary for an auditor to enter your home if you claim a home office deduction when you file your taxes. Once an auditor actually knocks on your door, you should be ready to show them copies of your documents.
Once an audit is complete, the auditor may find it necessary to adjust one or more of your previous tax returns.
In addition, you may have to pay various fees. Despite this, you still have the option to fight back by filing for an appeal. The process is usually not fast and you can expect to wait several months after the completion of your audit. In most cases, the appeals officer will contact you over the phone.
The appeal may not end in your favor. In that case, you could go further and have your appeal considered at the U. Tax Court. If you have tax problems, Fidelity Tax Relief can help you. We can represent you throughout the entire process with guaranteed results. Our team of knowledgeable experts can also guide you through the hoops of tax negotiations, offers in compromise, stop wage garnishments, and more.
Feel free to contact us if you have any questions about our high-quality services. When you owe money on your federal taxes, one of the common collection actions taken is IRS tax garnishment, typically on your wages or salary. Wage garnishment can leave a person with very little money on which to live. If you owe IRS any back taxes, the agency has the authority to claim it from you with penalties, fees, or any accrued interest.
Start Here. March 11, By Fidelity Tax Relief. What does it mean to be audited? Keep reading to learn about what it means to be audited. Correspondence Audits A correspondence audit is probably the easiest audit to deal with. Face-To-Face Audits The IRS used to perform most audits in person, covering a wide range of materials, but budget cuts over the years have resulted in the agency shifting toward more specific audits conducted through the mail.
Field Audits Like an office audit, a field audit is another type of face-to-face audit and it can be even more intrusive because it will take place in your home or business. Filing for an Appeal Once an audit is complete, the auditor may find it necessary to adjust one or more of your previous tax returns.
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