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Posts tagged "IRS audit"

Keep clean records to potentially avoid an IRS audit

Being audited may well top the list of taxpayers' worst nightmares. This process can easily consume a person's time, energy and money as it can be extremely frustrating to deal with the IRS for months on end. Fortunately, there are a few steps that one can take to potentially avoid an audit. For individuals who own a business, it is important that they keep all business and personal expenses separate. If an action was taken for both personal and business purposes, such as taking a trip or having lunch with a friend who is also a client, it is probably best to keep these expenses listed as personal ones. It is also important that one does not list a hobby as a business. Keeping well-organized records is also vital toward avoiding an audit. Before making any deduction, one should ensure that he or she has the receipt or other evidence to support it. Keep all of these documents together with each year's tax return.

IRS may gain greater access to tax documents

Recent court rulings may allow the IRS to have access to Massachusetts consumers' tax documents that were previously privileged. While the old rules allowed the IRS to access information from accountants regarding their clients, information given to attorneys was typically considered part of the attorney-client privilege. Accountants did have a loophole for keeping information confidential and out of the possession of the IRS when a tax lawyer hired an accountant, thus making this information part of the attorney-client umbrella. However, the IRS has filed several lawsuits that are changing the rules regarding these privileges. In a Ninth Circuit case, the court ruled that an appraisal could not be kept from the IRS by the taxpayer, lawyer and accountant. In another case, the court required a lawyer and accountant to disclose their discussions.

Surprise, surprise! The IRS makes a taxpayer-friendly announcement

The Internal Revenue Service (IRS) is not an agency that is liked by most. But when the IRS revises its rules to clearly benefit the taxpayers, one has to give the agency credit where credit is due. And credit is due, because two months ago, the IRS made a surprise but very welcome announcement.

IRS tax audit leads to revelation for financial columnist

It's very rare to meet a person who would welcome an audit from the Internal Revenue Service (IRS). In fact, the majority of people fear the idea of an audit so much, that they will do their very best to avoid such circumstances. Unfortunately, the IRS notifies a large number of people about impending tax audits every year. Recently, a Massachusetts financial columnist shared his own experience.

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