David, Brody & Dondershine, LLP Experienced General Business Law Attorneys
12355 Sunrise Valley Drive, Suite 650
Reston, VA 20191
703-264-2220
We’re moving! As of April 30, 2018, our new address will be 2100 Reston Parkway, Suite 370, Reston, VA 20191.

Work with experienced attorney when facing an IRS audit

We’ve been looking in recent posts at the various tax obligations sole proprietors need to manage in their business operations. One of the ways sole proprietors quickly learn the importance of their tax obligations is by facing an Internal Revenue Service audit. When a sole proprietor faces a tax audit, working with an experienced attorney can help ensure the sole proprietor handles the process as gracefully as possible.

Having an experienced advocate through the audit process can also help the IRS to see the business owner’s tax information and documentation in the proper light. This is particularly important in cases where a sole proprietor is found to have made mistakes in tax filing which could be interpreted by the IRS as fraud. 

When the IRS audits any taxpayer, they will do their best to determine whether noncompliance is the result of fraud or simply negligence. The basic difference between negligence and fraud is that the latter is intentional deception whereas the latter is, at worst, intentional disregard for the rules.

Negligence, according to the agency’s training materials, tends to be characterized by certain circumstances, such as: having a history of noncompliance; similar, prior audit results; lack of explanations for discrepancies in a tax return; lack of organization and accuracy in business records; and failure to provide a paid tax preparer with all necessary and appropriate information to properly complete a return.

Fraud, on the other hand, tends to occur with things like: false explanations for understating or omitting income; significant discrepancies between reported and actual income deductions; concealing sources of income; errors which all favor the taxpayer; false records; and so on.

In conducting an audit, the IRS will do the best it can to discern between tax negligence and tax fraud, but it isn’t always easy to discern the difference. Having an experienced advocate is therefore critical through the process, particularly if the audit leads into a criminal investigation.

No Comments

Leave a comment
Comment Information

Contact Us For More Information

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

Top

Office Location

David, Brody & Dondershine, LLP
12355 Sunrise Valley Drive
Suite 650
Reston, VA 20191

Phone: 703-264-2220
Fax: 703-264-2226
Map & Directions