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STRATEGIC TAX LAWYERS:  TAX BLOG

Don’t Make These Tax Errors

Tuesday, March 31, 2015

As tax season is coming to an end, you may be struggling to figure out how to get a bigger tax return or lower your tax liability.  We are the Strategic Tax Lawyers, a firm of payroll tax attorneys, state bank levy attorneys, and audit tax attorneys who want to give you some advice before you file your taxes.  The information you send to the IRS will determine how long you will need to look over your shoulder if you do anything questionable.  The Internal Revenue Service will typically have three years to audit you after you file your federal tax return.  Legally, this time frame can be doubled to six years if your tax return is missing over 25% of your income, which is considered by the tax authorities as a substantial understatement your income.  Also if you neglect to report over $5,000 of your foreign income the IRS will have six years from the date you filed to conduct an audit.  Other regulations for foreign returns allows the IRS three years from the date you filed the forms to audit you.

You may wonder about reducing the time for an audit by filing your taxes early.  This won’t work because legally the IRS will go by your actual tax filing date or the due date, which is April 15th of the respective year.  So filing early won’t buy you any time.  The most disturbing part is that if you never filed a tax return, then the IRS does not have a time limit to audit you.  That’s because it is fraud or a criminal violation to not pay taxes.  The IRS needs it’s time to assess the case to audit.  In general, the time limit for an audit is six years.

There are cases that the IRS can go back over ten years to audit if there are missing tax forms.  We, as payroll tax attorneys, state bank levy attorneys, and audit tax attorneys at the Strategic Tax Lawyers warn our clients about the seriousness of audits and the duration of audit exposure.  You will need to pay attention to the calendar until the time runs out and you are clear of the audit time frame, which is three years or six years.  

Sometimes though, the statute of limitations will never run out.  Make sure that you sign your return, because if you don’t, it is not considered a valid return so your audit clock will not start until it is signed.  Also, you should not change any language at the bottom of the return before you sign since the IRS will not accept it.  Even if you are missing a form, it can end up in audit torture.  So if you have any foreign bank accounts and you make an error, forget pertinent information, or just neglect to report income, then the IRS has the ability to audit you endlessly.

If a taxpayer owns part of a foreign corporation and there is a failure to file important forms, or if they are inaccurate, it can lead to penalties of $10,000 per form.  These are harsh rules imposed by the IRS and the case will remain exposed for a tax audit indeterminately and the statute of limitations will not expire.

If you don’t want the IRS to conduct an audit that is endless, then don’t neglect any detail on your tax return. There are serious civil penalties and/or criminal violations associated with your tax return. So we advise you to think twice before you file.The Strategic Tax Lawyers, LLP are a firm of payroll tax attorneys, state bank levy attorneys, and audit tax attorneys who specialize in the tax code with years of experience in tax-related and IRS issues.  Call the Strategic Tax Lawyers at (800) 669-4775 for a free consultation to assist you with your tax-related matters.