Filing your taxes is an annual obligation, likely even with you have barely earned any money. If you are an independent contractor, you may also have to spend quarterly estimated tax payments in addition to filing an annual return. Small mistakes can put anyone at risk of an audit.
An audit conducted by the Internal Revenue Service (IRS) involved a professional carefully reviewing financial records to validate that the taxpayer did pay an appropriate amount in income tax. Several years of financial records may be subject to review, and the process can be very stressful.
Everyone would prefer to avoid an audit. However, with the announcement of a major reinvestment in the IRS, lawmakers have spurred conversation about the possibility of more audits in the 2023 tax year. Will you have to worry about an increased risk of an audit this year?
$80 billion in funds will likely mean more IRS agents on the job
Federal lawmakers recently set aside a staggering $80 billion to help better fund the IRS. That will undoubtedly translate into a number of new workers, as many as 87,000, many of whom will help review tax returns and audit financial records when necessary.
In theory, the risk of an audit will be higher with more IRS workers on hand to review people’s tax records. However, if you generally file your tax return on time and do not take any kind of liberties with the exemptions you claim or the deductions you apply, simply needing to undergo an audit does not automatically mean that you will end up facing penalties.
Sometimes, the IRS determines through a thorough review that no significant fraud or underpayment occurred. An audit could actually exonerate you, especially if you have help presenting your side of the situation and reviewing your financial records.
Handling an audit alone is a stressful experience
Those facing some kind of tax controversy should be aware that they have the right to seek outside help. Discussing your situation with an attorney can help you prepare for the audit itself or better respond to the claims made by the IRS related to your history of tax payments.
When you have a lawyer handling your case, you are in a better position to exonerate yourself. You also won’t have to stress as much about the audit because you won’t have to present the evidence on your own behalf. You will have someone to speak up and make the case for you. You won’t have to learn tax law, and you won’t be at risk of getting tricked or manipulated the way you might be without professional support.
Responding appropriately to an upcoming tax audit can be the difference between amicably resolving the situation and possibly facing charges.