What Happens When You Fail a Tax Audit?

A tax audit is a thorough examination of your taxable income and deductions by tax attorneys to verify that your tax records are accurate. 

Detection of tax errors in your tax reports could result in heavy penalties, including imprisonment. The following are some of the things that happen whenever you fail a tax audit.

The IRS Issues You With a Written Notification

Once the tax attorneys discover that you have failed in your tax audit, they issue you with a written report informing you of the tax audit findings. 

The tax attorneys normally send their findings to you within thirty days and allow you to fill in for any appeal. The audit report usually highlights the amount that you owe and the reason why you are guilty.

Assessing the Audit Report

As soon as you receive the tax audit report, the tax attorneys expect you to analyze it and send your opinion feedback. If you determine that you are guilty, you can pay the amount you owe and terminate the case. Tax auditors assume that you plead guilty to tax offenses whenever you fail to respond to the notification.

Court Appeal

The court process begins as soon as you fail to respond to IRS notification where you are assumed to be guilty. At this stage, you are allowed to present your case and defend yourself from the litigation process. 

After this, the court of law could determine that you are guilty and you have committed a tax offense. The court judge will give you reasons as to why you are guilty and charge you accordingly.

Jail Imprisonment

The court can imprison you for a term of about one year whenever they discover that you intentionally failed to file your tax returns. You are also subject to spending five years in prison whenever the court determines that you engaged in tax evasion during a specific time.

Hefty Court Fines

You can also be fined heavily in a year for every additional tax return you do not file. The court will add another fine whenever the tax attorney establishes that you filed fraudulent tax returns.

Failing in your tax audits is a severe offense that will result in hefty fines and imprisonment. It is crucial that you file your returns on time and reveal the correct information. You can appeal against the penalties imposed by the IRS in case you fail a tax audit.

Who to Consult About Your Taxes

Filing taxes is a process that is not always possible to do alone. There are several, major types of professionals to contact about your taxes. 

The type of provider you choose depends on your specific tax needs. Become more familiar with the various tax experts and their duties in helping the taxpaying community.

Tax Accountants

Tax accountants handle the numbers and calculations that must be filled into tax returns. They assist clients in filling out returns correctly and meeting IRS deadlines. 

They provide their expertise before, during, and after an IRS audit. They keep up to date on current tax laws that can affect anything from penalties to deadlines and tax incentives.

Tax Attorneys

Tax attorneys assist with the legal aspects of paying taxes. They understand the basic overviews of local, state, and federal tax laws that most people find to be too complicated. Many of these rules are written in legal jargon, seem contradictory, and tend to be ever-changing.

Tax Preparers

There are different types of tax preparers that vary based on their uses and benefits to each client. Certified public accountants have passed the CPA exam for meeting high standards in accounting. Enrolled agents focus more on taxes than accounting. 

They are federally recognized tax preparers who provide services for clients who are dealing with the IRS. Non-credentialed tax preparers do not have professional credentials but practice in preparing taxes.

Tax Advisors

Tax advising is a broad field that comprises certified public accountants, attorneys, enrolled agents, and non-credentialed tax preparers. 

There are professional tax consultants who specialize in developing strategies to reduce tax fees and increase savings over time. They go beyond answering basic questions to develop complex, individualized solutions on how to handle one's taxes every year.

Many tax advisors are available online to provide services to their clients at home. Some professionals provide 24/7 help, which is especially helpful for tax procrastinators. 

Online advising is recommended for people who have all types of questions from basic and generic to specific and detailed.

Today, many people are filing their taxes online through software programs. When there are errors in your tax returns or you're facing an audit, finding a professional to work with is recommended. 

Most tax professionals are not generic and have specialties that distinguish them from others. It's the taxpayer's duty to know which expert to consult the most for a tax problem.