Receiving a tax audit notice is never pleasant. Audits can lead to additional taxes, interest, and penalties, but Noble Pacific Tax Group can help you minimize or even avoid these liabilities.

What Is a Tax Audit?

A tax audit reviews your financial information to ensure proper reporting and accurate tax liability. Audits can be conducted by the IRS or by state agencies and are often triggered by:

• High income or unusual tax attributes.
• Significant itemized deductions.
• Self-employment or cash-based businesses.
• Foreign assets or income.
• Reporting a hobby as a business.

What to Expect During a Tax Audit:

Audits involve communication with the IRS or state tax authority, ranging from providing documents to attending interviews. It’s essential to respond appropriately and promptly.

Post-Audit Outcomes:

1. No Change: Your return stands as is.
2. Agreement: You accept changes and arrange payment.
3. Disagreement: You can request a conference, mediation, or file an appeal.

Statute of Limitations:

Generally, audits must be completed within three years of filing, but this can extend to six years if unreported income exceeds a certain threshold or indefinitely in cases of fraud.

How to Succeed in a Tax Audit:

Preparation and strategic representation are key. Gather supporting documentation, hire an experienced representative, and develop a solid strategy. Winning an audit may mean no changes to your return or minimizing additional liability.