Top Ten Ways to Avoid an Audit

It is an unfortunate fact of life that self-employed taxpayers are more likely to be audited by Revenue Canada. That’s because we are easy targets since so many of us fail to keep proper records! To minimize your chances of going through this nightmare, follow these ten steps.

• File your return on time every year.

• Double-check your math. Don’t make mistakes. The best way to accomplish this is to…

• Buy a computer program. These days, it doesn’t make sense to do it by hand, unless you have the simplest of returns. A good program will notify you of errors, keep you up to date on recent tax changes, and even point out deductions you may be missing. If you don’t have a computer, hire a professional.

• Declare all your income, especially if you are self-employed.

• Don’t make up deductions, especially if you are self-employed. Be honest. Revenue Canada has ways of computer cross-checking your claims.

• Don’t e-file. OK, I have no facts or statistics to back this up, but my impression from talking to people inside the industry is that taxpayers who e-file are more likely to be audited. It seems logical. Have you ever prepared your own return, then taken it to an e-filer? Often they barely glance at the documents before sending the return off. These returns must have a high percentage of errors, and I’m sure Revenue Canada knows this and watches them carefully.

• I know this is a hard pill to swallow but earn less money. The more you make the greater the chance of an audit (you just pay more taxes anyway).

• Don’t declare business losses year after year. Losses are OK for 2-3 years

• Filing a guilty-looking return will increase your chance of an audit. For example, if you have a large meal and entertainment deduction, it must be backed up with adequate documentation.

• Keep accurate records

IRS Audit Representation

Our experienced professionals know the ins and outs of working with government tax agencies. We understand what your rights are, and are thoroughly schooled on tax ruling and regulation. We will act on your behalf from the moment you ask us to represent you. You possibly will never have to meet with the IRS!

The process of obtaining audit representation begins with an evaluation of the state or IRS notification you received

Back Taxes Owed

Have you filed your tax returns every year, but not paid all the tax you owe? Maybe you just didn’t have enough money at the time and planned to pay more later. Unfortunately, the penalties and interest that are added to back taxes greatly increase how much you will ultimately owe the government. If you are delinquent on your taxes and haven’t yet heard from the IRS, you soon will. The IRS may place a lien on your property or a levy on your bank accounts or wages. The potential damage from unpaid back taxes can be financially ruinous, but it is often avoidable. We can help you assess your tax debt options and negotiate a workable payment plan with the IRS. Unpaid back taxes is a problem that rarely goes away on its own. Contact us today and resolve your tax liability issues.

Penalty/Interest Abatement

One of the worst things about IRS tax controversies are the penalties and interest tacked on to your original bill. There are penalties for late filing, late payment, and negligence, to name but a few–and the interest on unpaid taxes can rapidly increase your total tax liability. If you are struggling with unpaid taxes plus additional penalties and interest, we can help. The IRS may abate certain penalties if there is reasonable cause and the failure was not due to willful neglect. Many taxpayers who have not previously had major issues with the IRS can qualify for a first time penalty waiver. Generally, the IRS does not revoke interest charges, but some established interest suspension provisions do apply–especially where the IRS has made an error. We understand if you are overwhelmed by penalties and interest. They often appear arbitrary and unfair. We will carefully scrutinize your tax situation to see where penalties and/or interest may be waived.

Other services include filing your US Federal corporation tax returns and meeting the State requirements.