Until recently, audits were conducted at the office of the IRS before an Office Auditor. "Thanks" to
technological advances in the storage and handling of data, a number of audits are conducted by mail,
and the percentage of taxpayers being audited has increased substantially. Your chances of being
audited are greater than ever before.
How difficult an audit will be is determined by many factors. One is whether the audit is by
correspondence, by meeting the Tax Compliance Officer at the IRS offices, or if it is a field audit. If you
are being audited, you can, and in many cases should, have someone represent you. Although the IRS
can force you to appear personally at an audit, such compulsory attendance is rare. Another factor that
can determine how difficult this experience will be is whether or not you hire a professional to assist
you. You probably should if you can.
When you hire a professional to assist you with your audit, you should be completely transparent with
them. Remember that it may be best to meet with a tax attorney if you need your communications with
your tax professional to be privileged.
Whatever you do, Do NOT ignore the audit notice. If you do not timely respond, the IRS will decide your
tax liability based on the information available to them. Then, they will send you a notice demanding
payment for the additional tax. If you continue to fail to respond, even if they are incorrect in their
assessment, eventually it will be too late to appeal their decision and you will be liable for the tax.
You will need to prepare your records for the audit for both the audit and for your tax professional to
review. Your records need to be organized and complete. If there are missing records, you should obtain
another copy as soon as possible. Provide everything to your tax attorney or enrolled agent and they will
determine which records should actually be brought to the audit. When it is time for the audit, your tax
professional will need to show that you are an organized person in order to increase your chances of as
favorable an outcome as possible.
IRS Liens, Levies and Seizures
Liens occur first, then levies, and last seizures.
60 days after the IRS has assessed a tax, if it has not been paid, an automatic IRS lien attaches to any
property you own at that time and any property you may acquire in the future. You will not be able to
change title to any of your real property until the lien is removed.
The next step for the IRS to take is to enforce the lien by placing a levy on your property, which will
effectively transfer the property from you to the IRS-the seizure. The IRS will often levy a bank account
and withdraw your funds. The IRS will also issue a Wage Levy, which will be sent to your employer. Your
employer will be ordered to give all but a portion of your paycheck to the IRS. If you are self-employed,
the IRS can require you to inform them of any receivables that may come due and the IRS will contact
your client and order them to make a payment to the IRS instead of you.
Liens and Levies on real estate. The effect of liens and levies on real estate varies depending on the type
of real estate and its use; e.g., your residence could be treated quite differently than other real estate
that you may own.
Stopping Liens, Levies and Seizures
Liens and Levies are lawful procedures used by IRS to collect unpaid taxes. If an IRS agent does not
follow the procedures, a lien or levy can be removed; but, this is only a temporary remedy.
There are other methods by which you can remove liens and levies that involve Offers in Compromise
"OIC"'s, Installment Agreements, Innocent Spouse Relief, and many others. All of these methods have
pros and cons, and what may seem like a good way to solve your problem could easily cause you more
problems in the future. For example many taxpayers seek to work out an Installment Agreement or
Offer in Compromise only to find that these methods require them to waive other very important rights
normally given under bankruptcy law or provided by statutes of limitation.
Many misunderstand these solutions as simple, especially tax resolution advertisers-nothing about the
U.S. Tax Code is simple.
If you have received a notice of lien or levy, your time to respond is limited and you should immediately
seek professional assistance.