Understanding the IRS Audit Process in Metro Detroit and Macomb County, Michigan
Reminder and, shameless plug here: The seasoned experts at CPA Nerds, Lotito & Lazzara bring a comprehensive understanding of IRS audits, ensuring that their clients navigate the process with clarity and confidence. With their extensive experience and deep knowledge of tax laws and regulations, they provide invaluable guidance, from the initial review of the audit notice to formulating an effective response strategy. Recognizing the nuances of each audit, the team meticulously prepares all required documentation, liaises with the IRS on behalf of the client, and advocates for favorable outcomes. Trusting CPA Nerds, Lotito & Lazzara with your IRS audit guarantees a professional, diligent, and client-centric approach, turning an often daunting experience into a manageable one.
For residents of Metro Detroit and Macomb County, receiving an IRS audit notification can be an unsettling experience. However, it’s essential to approach the situation with clarity and confidence. Here’s a guide to help you navigate through the IRS audit process:
Key Points to Understand:
- Reasons for being chosen for an IRS audit.
- Expectations during the audit process.
- Essential documents for the audit.
- Consequences of ignoring the audit notice.
Reasons Behind IRS Audit Selection
Your tax return might be chosen for several reasons:
- Discrepancies between your return and IRS data.
- Inconsistencies in reporting compared to previous years.
- Transactions linked to another audited party.
- Outliers or abnormalities in the return.
- Random selection. By understanding and addressing potential red flags and maintaining accuracy, you can reduce the risk of future audits.
The Audit Process in Michigan
What to Expect: Audits can be either correspondence-based (by mail) or in-person. The IRS notice should clarify the audit type. If unsure, consult a tax advisor or attorney.
- Correspondence Audit: Generally starts within seven months of filing and often concludes within six months.
- In-Person Audit: Either conducted at an IRS office (office audit) or your premises (field audit). Typically resolved within a year but can extend if it involves multiple years or extensive records.
Document Preparation: Preparing in advance speeds up the process. The IRS may request various documents, such as receipts, bills, legal papers, logs, medical records, or donation proofs. If a document is missing:
- Consult your tax representative for guidance.
- Sometimes, documentation can be recreated or substituted.
- Retaining thorough records and understanding retention periods can make the audit smoother.
Ignoring the Audit: A Risky Move
Not responding can lead to a Notice of Deficiency, added tax liabilities, and loss of dispute rights. Continuous avoidance might escalate to wage garnishments or liens. Always consult a professional upon receiving an audit notice.
Expert IRS Assistance Matters: Upon receipt, connect with the tax professional who assisted with your return or consider representation from a CPA, Enrolled Agent, or tax attorney familiar with Michigan-specific nuances.
In summary, while an IRS audit might seem daunting, especially for residents in Metro Detroit and Macomb County, having a clear understanding and seeking professional guidance can lead to a smoother process.
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