Awards & Recognition
The San Francisco IRS tax audit attorneys at the Tax Law Office of David W. Klasing have more than 20 years of experience representing businesses and individuals in federal examinations. Our founder, dually certified attorney-CPA David W. Klasing, also worked for over a decade as a public auditor, giving our tax firm sharper strategic insights into how the IRS builds cases, what rules and regulations auditors must follow, and how taxpayers can ensure they are well-prepared. In addition to preparing you for the audit, communicating with the IRS, and protecting your rights throughout the process, we also provide IRS appeals representation for taxpayers who wish to dispute the results of an audit. Contact us online to schedule a reduced-rate appointment or call our appointment only San Francisco tax office at (415) 287-6568 today.
How Long Does the IRS Have to Audit You?
The answer to this question depends on the circumstances surrounding the IRS audit. Generally speaking, there is a three-year auditing deadline, which is known as the “statute of limitations.” The clock begins counting down from either (1) the due date for the return being audited, or (2) the date on which the return was filed. However, there are some situations where the IRS can audit you even after three years have already passed.
For example, the IRS statute of limitations doubles to six years in cases where the taxpayer has “substantially” underreported his or her income. No statute of limitations exists in cases where the taxpayer has filed a false return or failed to file a return, effectively allowing the IRS to audit the taxpayer at any point in the future. Thus, the IRS may have a period of three years, six years, or unlimited time to conduct an audit.
IRS Audit Triggers
There are dozens of reasons the IRS may select a taxpayer or business entity for a federal tax audit. Some common examples of IRS tax audit triggers include, but are not limited to, the following:
- Being self-employed or owning a business
- Claiming an excessive number of tax credits or deductions
- Claiming certain types of deductions and credits that are commonly associated with tax fraud, such as the Child Tax Credit, Earned Income Tax Credit (EITC), or Home Office Deduction
- Doing business with individuals or companies that have been audited in the past
- Earning a low or high level of income, particularly above $200,000
- Falsely padding deductions
- Forgetting to report all sources of income, including global income
- Making large cash transactions, wire transfers, or bank deposits, particularly above a $10,000 threshold
- Operating a cash-based business, such as a convenience store, restaurant, parking garage, liquor store, salvage yard, or pawn shop
- Underreporting your income
While less common, some taxpayers are even chosen at random by computer algorithm. No matter why you were selected for a tax audit, it is critical that you contact an experienced San Francisco audit lawyer right away for guidance.
What is the IRS Auditing Process?
The IRS neither conducts examinations, nor notifies taxpayers of audit selection, via telephone. Instead, the Internal Revenue Service will send you a written notice once you have been selected for an audit. For example, if you claim the EITC and are chosen for a federal tax audit, the IRS will alert you using Notice CP75, which asks you to supply additional information so that the IRS can verify your eligibility for the tax credit.
There are three different types of IRS audits for which you may be chosen: correspondence audits, which are conducted entirely via mail “correspondence”; office audits, which occur at an IRS field office, such as the IRS office located in downtown San Francisco; and field audits, in which the auditor will physically come to your home and/or business searching for financial records.
Depending on the nature of the audit, the process may take anywhere from a single afternoon to, in more complex cases, several weeks or longer. The process can also be extended if the taxpayer requests additional time to reply to IRS requests for information. As the IRS explains, total auditing time depends “on the type of audit; the complexity of the issues; the availability of information requested; the availability of both parties for scheduling meetings; and your agreement or disagreement with the findings.”
While field audits are generally the longest-lasting and most invasive types of IRS audits, any examination is financially dangerous for the taxpayer. When the audit concludes, the IRS auditor may assess additional taxes, charge interest, and require the taxpayer to pay various penalties. In a worst-case scenario, the audit could even lead to criminal prosecution of the taxpayer for fraud or tax evasion, depending on whether there are indications that the taxpayer acted willfully to avoid his or her federal tax liabilities.
How Do You Appeal an IRS Tax Audit?
IRS auditors are not infallible. If you believe that the auditor who conducted your examination made mathematical, administrative, or procedural errors, you may dispute the results of the audit by requesting an appeal.
Federal tax audit appeals are overseen by the IRS Office of Appeals, which enforces strict eligibility standards and procedural criteria for appealing a federal tax audit. After determining your eligibility – and ruling out possible alternatives to dispute resolution, such as IRS appeals mediation programs – the first step is to file a “written protest,” which is a collection of information including:
- Copies of the documentation you received from the IRS
- Reasons you disagree with the auditor’s findings
- The facts, court rulings, or laws that support your position
- Your contact information
Be forewarned that the IRS will reject all appeals which it determines are based on “frivolous tax arguments,” such as constitutional arguments based on the First or Sixteenth Amendments. Our San Francisco tax audit attorneys can help you prepare the strongest possible materials for your written protest and continue to guide you throughout the remaining stages of the appeals process if your request is accepted by the IRS.
San Francisco Federal Tax Audit Lawyers and CPAs for Businesses and Individuals
If you or your business has been chosen for a federal tax audit, you should consult with an experienced San Francisco IRS audit lawyer right away for help. An IRS tax audit places you at risk of substantial tax assessments, including costly interest and penalties. Moreover, if the auditor who examines your return concludes that you acted intentionally to evade federal taxes, your case could even be referred for criminal prosecution.
Don’t wait to start preparing for an IRS audit. To schedule a reduced-rate consultation, contact the Tax Law Office of David W. Klasing online, or call our San Francisco location at (415) 287-6568 right away. Please note that our San Francisco office is by appointment only.
