From the Tax Law Firms of David W. Klasing

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If you are concerned that you will soon be the subject of an IRS tax audit or criminal tax investigation in 2021 or beyond, it is in your best interest to speak to a tax attorney as soon as possible. There are steps you can take now to avoid unnecessary auditing and save yourself time and money.

To the Tax Law Firms of David W. Klasing, we are ready and able to help you with all of your tax needs. Our experienced domestic and international tax attorneys and CPAs will help guide you through the complexities of getting back into compliance without facing criminal tax lawsuits. Call our office today at (800) 681-1295 or schedule online here to set up a low cost initial consultation.

More tax audits in 2021 and beyond

The IRS alleges that the tax gap or the amount of unpaid taxes due to tax evasion schemes has been higher in previous years than most estimates suggest. The gap, according to IRS commissioner Chuck rettig, is due to certain tax evasion techniques that the IRS was not previously aware of or was unable to combat. In the recent past, the IRS has been subjected to budget cuts and layoffs, hiring freezes and natural attrition that have significantly weakened the agency over time, despite mandates from Congress that the IRS should take on more responsibility.

Only 0.01% of S corporations that filed a tax return in 2018 were federally audited, according to public information gathered by the IRS. But proposed changes to the agency’s functional structure and budget suggest the IRS will increase audit activity by “50% more than … the previous year,” says IRS deputy commissioner By Lon Harris.

According to President Biden’s proposed IRS overhaul, the increased funding will allow the IRS to crack down in several ways:

  • Increase technological capacity to more effectively identify targets for audit and criminal tax investigations.
  • Strengthen the internal capacity to process the analysis of a greater number of tax returns
  • Perform audits at a rate that would cover a minimum income level for individuals and companies
  • Force banks to disclose information about the activity of wealthy account holders

These suggestions are by no means new. However, recent statements from Republican and Democratic leaders on the Hill suggest that these initiatives could receive bipartisan support for the first time in more than a decade. The Congressional Budget Office released a report in july 2020 who estimates a $ 20 billion increased IRS funding over the next decade would create $ 61 billion in revenue – making a profit effectively. Therefore, it is in the government’s interest to induce the agency to return a high return on previously undiscovered income through a higher rate of tax audits.

Protect yourself or your business against more likely tax audits in 2021

Individuals and businesses who do not deliberately attempt to evade the IRS file their tax returns and other documents with the government each year. There are often inconsistencies with statements which may seem perfectly harmless but which can potentially attract the wrath of the government. To avoid the scrutiny and additional audit activity that will occur in 2021, you must act now to confirm that all of your past and present returns are in compliance with the Internal Revenue Code. Here are some examples of simple strategies you can implement now that could solve a disastrous problem in the future.

Keep detailed and organized records

Depending on the complexity of your returns, you may choose to use tax filing software, hire an outside tax specialist, or keep all of your affairs in-house. Whichever route you choose, you should know that most audits start because of facial evidence of tax non-compliance on returns. By making sure that your returns are accurate and that your records are easy to access and understandable in their current form, you can avoid the increased risks of an IRS tax audit or criminal tax investigation in 2021 and beyond. .

Be aware of COVID-19 tax code adjustments

You may find it more difficult to navigate the Internal Revenue Code in 2021 due to more frequent process changes given the pandemic. Don’t be intimidated – a knowledgeable tax attorney and CPA can explain these new developments to you and make sure you don’t miss out on any opportunities or fall into deep trouble.

Keep in mind that you will be responsible for the content of your statements. Even if you hire a third party tax expert who gets it wrong, it’s your name that will grab the government’s attention. If your financial situation is complex, you need to make sure that you are in good hands.

If you are concerned about the increase in IRS audits in 2021, or potential criminal exposure during your past tax returns, you should seek the advice of an experienced California tax attorney and CPA. who can advise you on the inner workings of the IRS. and the agency verification and voluntary disclosure process. Only a lawyer can go through the voluntary disclosure process which can protect you from an unpleasant criminal investigation and subsequent criminal prosecution if you have indeed cheated on your previous tax returns.

See the full version of this article here.

Public contact: Dave Klasing Esq. MS-Tax CPA, [email protected]

SOURCE Taxation Firms David W. Klasing, PC

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