Do You Need a Lawyer for an IRS Tax Audit?

How Can a Tax Attorney Help You?

Hiring a tax attorney to help you with your tax situation is one of the best things you can do to protect your legal rights as a taxpayer. It is in your best interest to engage the services of an experienced tax attorney, so you can have a favorable outcome after your IRS tax audit.

An attorney will fight for you, advocate on your behalf when communicating with an IRS agent, and make sure the IRS complies with all procedures. It is advisable to hire a lawyer with experience in handling both correspondence and in-person audits, particularly if your audit needs to be settled at an IRS office.

Guidance Through the IRS Audit Process

A tax audit lawyer can assist you throughout the entire process, from gathering the necessary documents for submission to the IRS, to negotiating favorable terms for your tax resolution strategy, and addressing any inquiries from the IRS regarding your returns..

A lawyer will have knowledge about the relevant tax law and tax codes that apply to your case, which can ensure your audit results are optimal. Additionally, a tax audit lawyer can provide guidance on future tax planning to minimize your tax liability and reduce the likelihood of future audits.

Find IRS Audit Defense Strategy

Carefully analyzing the details of the Internal Revenue Service tax code is essential in formulating an effective defense strategy for your IRS tax audit.. Your IRS tax audit defense strategy can include limiting the scope of the audit, reviewing possible income reporting issues, and correcting tax returns. The goal of your IRS audit defense strategy is to reduce the financial impact of your tax issues, such as minimizing tax penalties.

Protect Your Credit Score

Along with defending clients, a tax lawyer can also help protect your credit score. While the IRS does not report audits to any of the three credit reporting bureaus, legal actions from the IRS can potentially impact your credit score. If the IRS decides to place a lien on your property because of unpaid back taxes, the lien becomes public record, and this can hurt your credit overall.

Why Is a Tax Attorney Better Than a CPA?

When you have tax problems, it’s better to hire a tax lawyer instead of other tax professionals. Although a CPA can assist you during the audit process, it is important to note that they are not bound by attorney-client privilege, unlike a tax attorney.

Ultimately, this means that tax attorneys will protect client interests and keep your correspondence confidential. This can offer you more protection if your tax issues have to be settled in tax court, since your attorney cannot testify against you.

Why Does an IRS Audit Happen?

An IRS tax audit is much rarer than most taxpayers assume. The likelihood of being audited is approximately 0.3% in most years. Of that small number of people who are audited, many of them are chosen by random selection based on a computer algorithm used by the IRS. Other reasons you may be selected for an IRS tax audit include:

• Failure to Report All Income

Failing to report all of your income is a major red flag that can trigger a tax audit. The IRS uses a program that automatically checks to see if all the amounts on your income tax return match the data the IRS has about your income. If there are discrepancies, the IRS may conduct a review or a tax audit of your tax return.

Some taxpayers who file taxes by themselves may also accidentally forget to report income from side hustles or cash income. You should always report income from 1099s, W-2S, interest and earnings from your bank accounts, and gains on your stocks. Ensuring accurate reporting of all income on your tax return is the most effective way to safeguard against a tax audit.

• Digital Asset Transactions

If you have any digital asset transactions from the year, these transactions will also need to be reported when you file your tax return. Digital asset transactions are associated with cryptocurrency. As part of your federal return, you will need to report these transactions on your 1040. Failure to report income from cryptocurrency transactions may be considered tax fraud.

• Certain Deductions

Taking out certain deductions can also flag the IRS as an unusual activity that needs to be reviewed. While you are entitled to claim deductions you are qualified for, you must be sure that you are following the tax rules correctly. For example, if you are taking the home office deduction, you cannot deduct expenses that are solely personal. You will also need to be able to prove that your deductions were business-related.

• Foreign Assets

Finally, if you have any foreign accounts, you are required by tax law to report these foreign bank accounts on your annual federal return. You are required to file a Foreign Bank Account Report to account for all of your foreign income. Failure to report information about your foreign assets can trigger a tax audit to assess tax evasion.

What Should You Do When You Get an IRS Audit Letter?

If you get a letter from the IRS about a tax audit, the first thing you should do is contact a tax attorney. Although some IRS audits can be handled without tax attorneys, it’s still better for your tax audit compliance to work with a tax attorney who can ensure you are meeting all the IRS requests. After contacting a tax attorney, you will want to take the following steps:

Review Details in the Letter

First, you will need to review the details of the letter sent by the Internal Revenue Service. The IRS letter will contain information about why you were selected for an audit under tax law, the type of documentation you will need to send back to the IRS, and the proposed changes the IRS suggests you make to your tax return to close the audit.

You should always double-check that the numbers on your tax return match the numbers the IRS wants to update, so you can understand your tax liabilities. Usually, the difference in these numbers is the same sum as the money the IRS believes you owe.

Only Send Copies of Documents

When you gather documents to send to the IRS, you should only send copies. Sending original documents does not allow you to keep any documents for your records. You should send copies of your documents via certified mail or fax for the most expedient resolution. You can also check your local IRS agency locations to submit your documents in person.

Sign and Return the Agreement Document

If the IRS accepts the documents you have sent to support your case or update your return, your IRS audit will be resolved. The only thing you will need to do is sign an agreement document that states you agree with the changes proposed by the IRS and you will comply with any further actions you need to take, such as paying your taxes or reporting additional income.

Pay Remaining Taxes, Penalties, and Interest

The IRS charges penalties and interest on delinquent tax returns, so if you have been selected for an IRS audit, you will likely have to pay these fees to clear your tax debt. You may also have additional tax liabilities now that all of your income has been reported.

Fortunately, the IRS offers several payment programs to help taxpayers pay off taxes owed to the state or federal government. As part of your audit agreement, you may need to sign up for one of these installment agreements to resolve your taxes. If you don’t qualify for any of these plans, you can work with an attorney to find another way to settle your tax debt, such as with an Offer in Compromise.

What If You Don’t Agree With the Conclusion the IRS Makes?

If you don’t agree with the conclusion the IRS makes about your audit, you can work with a lawyer to review your options. Your tax attorney will help you send additional documentation or request a conference with the IRS agent in charge of your case. You can also file an appeal in writing.

Even if you don’t agree with the changes proposed by the IRS, you must respond in some way to an IRS letter by the specified due date. If you fail to give a response, the IRS is entitled to file a Statutory Notice of Deficiency under the tax law. This is a legal notice informing you about your unpaid balance. You will have 90 days to respond to this notice.

When Will the IRS Finish the Audit Review?

It can usually take three to six months for the IRS to complete an audit review. Your process may be delayed if the IRS agent requires more information or if your audit needs to be expanded to include returns from other years. An office audit is usually faster than a correspondence audit.

How Many Tax Audits Can the IRS Review?

Sometimes, the IRS may be concerned that you owe more money to the state or federal government. The IRS has the right to look at returns from the last three to six years to assess your return for unusual patterns.

How Can IRS Audits Affect You?

While an IRS audit can usually be resolved quickly, some audits can have extreme consequences because tax fraud and tax evasion are against the law. If the audit determines that you have engaged in tax fraud, the IRS may take legal action, including pursuing tax court proceedings, imposing liens and levies on your property, and potentially even leading to criminal charges.

In the event that the IRS pursues criminal charges against you for unpaid taxes, it is crucial to promptly secure legal representation for your defense. The penalties for fraud can include imprisonment of up to a year, while the jail time for evasion can be three to five years. With the right person representing you, you may be able to reduce these charges.

What Is the Most Common Way People Are Audited?

In the majority of cases, audits are conducted through correspondence. In-person audits are usually only for evasive taxpayers or sometimes small business owners with a lot of information that needs to be reviewed. If you do need to work with IRS agents for an office audit, the IRS will provide this information in your audit letter.

If you receive a notice of an IRS audit, it’s in your best interests to contact a tax professional such as a tax attorney as soon as possible. When you work with an audit lawyer, you can minimize your tax liability, provide guidance on tax planning, and alleviate the burden and stress of an IRS audit. 

Get in touch with Damiens Law Firm, PLLC at 601-957-9672 to learn more about defense strategies for IRS audits today.

It isn’t unusual for independent contractors or owner-operators to struggle when it comes time to file their tax returns.

There are numerous reasons truckers don’t file the

Many taxpayers are concerned when they are notified about tax matters, such as an IRS audit. However, while audit issues can certainly be alarming, you can minimize the impact on your life when you hire a tax attorney to help you with your case.Seeking legal representation from a tax attorney is crucial for effectively resolving your tax audit. Learn more about the ways a tax attorney can help you, why IRS audits happen, and the entire auditing process.

How Can a Tax Attorney Help You?

Hiring a tax attorney to help you with your tax situation is one of the best things you can do to protect your legal rights as a taxpayer. It is in your best interest to engage the services of an experienced tax attorney, so you can have a favorable outcome after your IRS tax audit.

An attorney will fight for you, advocate on your behalf when communicating with an IRS agent, and make sure the IRS complies with all procedures. It is advisable to hire a lawyer with experience in handling both correspondence and in-person audits, particularly if your audit needs to be settled at an IRS office.

Guidance Through the IRS Audit Process

A tax audit lawyer can assist you throughout the entire process, from gathering the necessary documents for submission to the IRS, to negotiating favorable terms for your tax resolution strategy, and addressing any inquiries from the IRS regarding your returns..

A lawyer will have knowledge about the relevant tax law and tax codes that apply to your case, which can ensure your audit results are optimal. Additionally, a tax audit lawyer can provide guidance on future tax planning to minimize your tax liability and reduce the likelihood of future audits.

Find IRS Audit Defense Strategy

Carefully analyzing the details of the Internal Revenue Service tax code is essential in formulating an effective defense strategy for your IRS tax audit.. Your IRS tax audit defense strategy can include limiting the scope of the audit, reviewing possible income reporting issues, and correcting tax returns. The goal of your IRS audit defense strategy is to reduce the financial impact of your tax issues, such as minimizing tax penalties.

Protect Your Credit Score

Along with defending clients, a tax lawyer can also help protect your credit score. While the IRS does not report audits to any of the three credit reporting bureaus, legal actions from the IRS can potentially impact your credit score. If the IRS decides to place a lien on your property because of unpaid back taxes, the lien becomes public record, and this can hurt your credit overall.

Why Is a Tax Attorney Better Than a CPA?

When you have tax problems, it’s better to hire a tax lawyer instead of other tax professionals. Although a CPA can assist you during the audit process, it is important to note that they are not bound by attorney-client privilege, unlike a tax attorney.

Ultimately, this means that tax attorneys will protect client interests and keep your correspondence confidential. This can offer you more protection if your tax issues have to be settled in tax court, since your attorney cannot testify against you.

Why Does an IRS Audit Happen?

An IRS tax audit is much rarer than most taxpayers assume. The likelihood of being audited is approximately 0.3% in most years. Of that small number of people who are audited, many of them are chosen by random selection based on a computer algorithm used by the IRS. Other reasons you may be selected for an IRS tax audit include:

• Failure to Report All Income

Failing to report all of your income is a major red flag that can trigger a tax audit. The IRS uses a program that automatically checks to see if all the amounts on your income tax return match the data the IRS has about your income. If there are discrepancies, the IRS may conduct a review or a tax audit of your tax return.

Some taxpayers who file taxes by themselves may also accidentally forget to report income from side hustles or cash income. You should always report income from 1099s, W-2S, interest and earnings from your bank accounts, and gains on your stocks. Ensuring accurate reporting of all income on your tax return is the most effective way to safeguard against a tax audit.

• Digital Asset Transactions

If you have any digital asset transactions from the year, these transactions will also need to be reported when you file your tax return. Digital asset transactions are associated with cryptocurrency. As part of your federal return, you will need to report these transactions on your 1040. Failure to report income from cryptocurrency transactions may be considered tax fraud.

• Certain Deductions

Taking out certain deductions can also flag the IRS as an unusual activity that needs to be reviewed. While you are entitled to claim deductions you are qualified for, you must be sure that you are following the tax rules correctly. For example, if you are taking the home office deduction, you cannot deduct expenses that are solely personal. You will also need to be able to prove that your deductions were business-related.

• Foreign Assets

Finally, if you have any foreign accounts, you are required by tax law to report these foreign bank accounts on your annual federal return. You are required to file a Foreign Bank Account Report to account for all of your foreign income. Failure to report information about your foreign assets can trigger a tax audit to assess tax evasion.

What Should You Do When You Get an IRS Audit Letter?

If you get a letter from the IRS about a tax audit, the first thing you should do is contact a tax attorney. Although some IRS audits can be handled without tax attorneys, it’s still better for your tax audit compliance to work with a tax attorney who can ensure you are meeting all the IRS requests. After contacting a tax attorney, you will want to take the following steps:

Review Details in the Letter

First, you will need to review the details of the letter sent by the Internal Revenue Service. The IRS letter will contain information about why you were selected for an audit under tax law, the type of documentation you will need to send back to the IRS, and the proposed changes the IRS suggests you make to your tax return to close the audit.

You should always double-check that the numbers on your tax return match the numbers the IRS wants to update, so you can understand your tax liabilities. Usually, the difference in these numbers is the same sum as the money the IRS believes you owe.

Only Send Copies of Documents

When you gather documents to send to the IRS, you should only send copies. Sending original documents does not allow you to keep any documents for your records. You should send copies of your documents via certified mail or fax for the most expedient resolution. You can also check your local IRS agency locations to submit your documents in person.

Sign and Return the Agreement Document

If the IRS accepts the documents you have sent to support your case or update your return, your IRS audit will be resolved. The only thing you will need to do is sign an agreement document that states you agree with the changes proposed by the IRS and you will comply with any further actions you need to take, such as paying your taxes or reporting additional income.

Pay Remaining Taxes, Penalties, and Interest

The IRS charges penalties and interest on delinquent tax returns, so if you have been selected for an IRS audit, you will likely have to pay these fees to clear your tax debt. You may also have additional tax liabilities now that all of your income has been reported.

Fortunately, the IRS offers several payment programs to help taxpayers pay off taxes owed to the state or federal government. As part of your audit agreement, you may need to sign up for one of these installment agreements to resolve your taxes. If you don’t qualify for any of these plans, you can work with an attorney to find another way to settle your tax debt, such as with an Offer in Compromise.

What If You Don’t Agree With the Conclusion the IRS Makes?

If you don’t agree with the conclusion the IRS makes about your audit, you can work with a lawyer to review your options. Your tax attorney will help you send additional documentation or request a conference with the IRS agent in charge of your case. You can also file an appeal in writing.

Even if you don’t agree with the changes proposed by the IRS, you must respond in some way to an IRS letter by the specified due date. If you fail to give a response, the IRS is entitled to file a Statutory Notice of Deficiency under the tax law. This is a legal notice informing you about your unpaid balance. You will have 90 days to respond to this notice.

When Will the IRS Finish the Audit Review?

It can usually take three to six months for the IRS to complete an audit review. Your process may be delayed if the IRS agent requires more information or if your audit needs to be expanded to include returns from other years. An office audit is usually faster than a correspondence audit.

How Many Tax Audits Can the IRS Review?

Sometimes, the IRS may be concerned that you owe more money to the state or federal government. The IRS has the right to look at returns from the last three to six years to assess your return for unusual patterns.

How Can IRS Audits Affect You?

While an IRS audit can usually be resolved quickly, some audits can have extreme consequences because tax fraud and tax evasion are against the law. If the audit determines that you have engaged in tax fraud, the IRS may take legal action, including pursuing tax court proceedings, imposing liens and levies on your property, and potentially even leading to criminal charges.

In the event that the IRS pursues criminal charges against you for unpaid taxes, it is crucial to promptly secure legal representation for your defense. The penalties for fraud can include imprisonment of up to a year, while the jail time for evasion can be three to five years. With the right person representing you, you may be able to reduce these charges.

What Is the Most Common Way People Are Audited?

In the majority of cases, audits are conducted through correspondence. In-person audits are usually only for evasive taxpayers or sometimes small business owners with a lot of information that needs to be reviewed. If you do need to work with IRS agents for an office audit, the IRS will provide this information in your audit letter.

If you receive a notice of an IRS audit, it’s in your best interests to contact a tax professional such as a tax attorney as soon as possible. When you work with an audit lawyer, you can minimize your tax liability, provide guidance on tax planning, and alleviate the burden and stress of an IRS audit. 

Get in touch with Damiens Law Firm, PLLC at 601-957-9672 to learn more about defense strategies for IRS audits today.

ir taxes, but the outcome is the same. If the IRS files on your behalf, they base their calculation solely on your income, which results in tax returns that are rarely accurate.

Find Local Tax Attorneys

While you may consider talking to a tax relief company about your issue, you should discuss your situation with tax attorneys first. Having a tax debt attorney on your side will ensure you’re prepared if the IRS files an investigation into your finances or tries to garnish your pay. 

The IRS will seek you out if you fail to pay your tax liability. State and Federal tax agencies will collect tax debt at all costs, and you’ll want a lawyer representing you if you face bank levies or Federal or State tax liens. 

Are You a Self-Employed Truck Driver?

A truck driver who is a W-2 employee will have taxes pulled from their paycheck by their employer. However, independent contractors are responsible for withholding their taxes. 

Truck drivers often don’t file their taxes, resulting in the IRS filing on their behalf. Avoid this by contacting an attorney as soon as you struggle with your taxes.

Talk to an Expert

Tax season can be frustrating if you are a self-employed truck driver. You may not know how to ensure eligibility for tax relief programs or be confused by tax deductions, self-employment taxes, and quarterly taxes. Instead of letting back taxes grow, take control of your financial situation.

If the IRS is already contacting you about owed taxes, don’t despair. A skilled tax debt lawyer can help you find a resolution.

Tax Debt Relief for Truck Drivers

For truck drivers facing tax debt, tax relief offers a chance to regain their financial footing. Tax relief occurs when the IRS or local tax agency agrees to reduce tax debt owed.

Your attorney will work closely with the IRS to find a solution for your tax problem. They may request a payment plan, propose installment agreements, or negotiate to lower your tax debt. 

Tax Relief Services

Your specific circumstance will determine if you’re eligible for tax relief. Some tax relief options include:

• Installment agreements
• The Fresh Start Program
• Offer in compromise 
• Penalty abatement
• Currently non-collectible status

Understanding Truck Driver Tax Deductions

Your work-related expenses aren’t tax deductible if you drive for a trucking company as a W-2 employee. The Tax Cuts & Jobs Act of 2017 removed the majority of deductions for drivers who are trucking business employees.

Still, you’ll want to track your expenses and out-of-pocket costs. Many employers will compensate you for these expenses since they deduct them when they file business taxes.

Know That Tax Law Constantly Changes

This act and others like it can cause truckers to be surprised by tax bills. Misreporting your income is easy if you are unaware of law changes. 

Tax law changes frequently enough that the average individual can lose track of the policies that impact their tax filing, causing them to incur tax debts. Contact an attorney immediately if you have an unexpected tax debt.

Track Everything

If you are self-employed, you’ll want to keep track of your expenses. Truck drivers often fail to deduct trucking expenses because they don’t keep records when traveling over the road.

Although holding on to receipts and invoices may feel inconvenient initially, the difference it will make when filing your tax returns is worth the aggravation. However, resist the urge to claim deductions you don’t have documentation for, no matter how tempted you may be.

Protect Yourself

If IRS agents choose to audit you because you have an excessive amount of deductions, they will want records. In addition to paperwork proving your expenses, you’ll need to verify deductions were not used for personal purposes.

Tracking your expenses will require record keeping which can feel tedious. However, you’ll be glad you did if the IRS audits you. 

Common Deductions for Truck Drivers

You can enjoy significant tax breaks by claiming deductions on your tax returns. Some deductions you don’t want to overlook include:

Education

If you paid for training to acquire your CDL, your education expenses could be deducted. However, the education you received must benefit your current line of work or be required for your career.

Trucking-related publications like instructional materials may be deductible as well. To ensure the eligibility of any publications, contact a tax professional.

Trucking Expenses

Since the Internal Revenue Service views your truck as a qualified non-personal use vehicle, you can claim many of the expenses accrued by operating the vehicle. Fuel, insurance, registration fees, repairs, and tires are deductible.

Many truck drivers forget to deduct parking fees, tolls, and the heavy highway vehicle use tax. Every business expense counts, and being able to deduct the full cost of a trucking expense will save you money on your return.

Travel Expenses

In order to deduct expenses such as meals or lodging, you must be away from your tax home, typically overnight. Your tax home is your place of business.

For some drivers, this may be their business headquarters or residence, while for local drivers, it may be an entire city. Since the trucking industry is based on travel, often cross country, some drivers’ tax home may be across multiple states. 

Lodging

If you’re familiar with lodging deductions in other industries, you’ll need to remember the IRS handles lodging differently for truckers. Instead of claiming a per diem rate per day, truck drivers must claim the actual lodging expenses.

Meals

Drivers deducting meals can claim the per diem rate or the actual expenses. Truck drivers bound by the Department of Transportation’s time limits for work cannot claim the total cost of their meals. 

However, they can claim 80% of their actual meal expenses. To do so, they must be away from their tax home.

Association Dues

If your career requires you to join a union or association, membership fees can be deducted from your income. Unfortunately, many truck drivers are unaware that voluntary memberships may qualify if they directly benefit your work.

Avoid Unfiled Tax Returns

If you have unfiled tax returns, your priority should be hiring a lawyer to help you file them. When you don’t file a tax return, the IRS might file an SFR (substitute for return) for you. 

Truck drivers rank among the highest group for missing filing and having an SFR filed on their behalf. This statistic is unfortunate because if the IRS files for you, they calculate off the income reported, which results in a bigger bill.

File Even if You Can’t Pay

When the IRS files on your behalf, it can negatively impact your chances of obtaining benefits like loans, the Payroll Protection Plan, the economic injury disaster loan, and receiving stimulus checks (when applicable). To avoid this, file your taxes even if you will have a remaining balance.

Since the IRS bases its calculation on the income on your 1099, they don’t get an accurate representation of your actual income after expenses. This miscalculation results in you paying a greater tax bill than you should.

Contact a Tax Resolution Attorney

Hire a tax relief attorney to prevent aggressive collection attempts. Even if you only have profit and loss statements for your tax year, an attorney will find the best outcome for your situation.

Don’t let tax debts cast a shadow on your future. Instead, contact Damiens Law Firm, PLLC, at (601) 957-9672 today.