ROSELAND – Why are some people selected for audit by the Internal Revenue Service and others are not?
“There are a number of red flags that will alert the IRS when tax returns are processed, such as a person indicating a lot of expenses and very little income, or if a business indicates its cost of goods sold far exceeds its sales,” says Rosemary Ervin, CPA, a director at the Hunter Group in Fair Lawn. “Other people are simply selected randomly for an audit.”
What’s the first thing you should do after receiving an audit notice from the IRS, besides fainting? Ervin suggests getting a power of attorney, “This will allow you to be represented before the IRS by a tax professional. Tax professionals can find what triggered the audit, and they have experience working with the auditors to reach a solution.”
Penalties can be assessed for late payment, late filing, inaccuracy or “flagrant disregard of the law,” as well as failure to file. If the failure to file is deemed willful, as opposed to non-willful, criminal charges may be applied. Just recently, former New York Mets pitcher Jerry Koosman was sentenced to six months in prison for failing to pay his taxes. Ervin stresses that “interest is always attached” to monetary penalties.
To listen to a free podcast on this and other helpful financial topics, check out the NJSCPA’s award-winning podcast series at www.MoneyMattersNJ.com/podcasts.
Connect with NJTODAY.NET
Join NJTODAY.NET's free Email List to receive occasional updates delivered right to your email address!