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While the chances of being audited by the IRS remain relatively small for most taxpayers, there are certain red flags that are likely to trigger an IRS audits. Unfortunately, these red flags aren’t always common knowledge. Because of this, taxpayers are often taken aback when audited and have no idea why they are under IRS review. When tax audits arise, they can often pose additional risks of financial penalties for taxpayers. An experienced tax lawyer, like Managing Partner Kevin E. Thorn and the attorneys at Thorn Law Group, can provide help to taxpayers who are facing IRS audits as well as assistance with protecting finances.

What Are Some Red Flags That May Increase Your Chances of an Audit?

The IRS has sophisticated techniques for identifying possible violations of tax laws. Some of the red flags that the IRS looks for and which can prompt an investigation include:

• Incomes that don't match up: Your employer will send reports of the wages that you earn to the IRS. All your 1099s for non-wage income earned will also be forwarded to the Internal Revenue Service. If the income that you report on your return is different from what these forms suggest your income should be, the IRS likely will investigate the discrepancy.
• Failure to report offshore funds. The Foreign Account Tax Compliance Act imposed requirements that foreign financial institutions make reports about certain U.S. account holders. If a foreign bank reports your offshore accounts and you did not declare them personally, this is a major red flag to the IRS.
• Declaring too many business expenses: If you claim too many deductions for alleged business expenses, the IRS may ask for proof that these deductions were for legitimate business purposes. The IRS will usually catch outliers easily and will compare expected deductions for your profession to make sure your itemized deductions are within the normal range.
• Making early withdrawals from retirement accounts: The IRS knows many taxpayers who take early withdrawals from 401(k)s and IRAs tend to make errors on their tax returns. These withdrawals may cause the IRS to take a second look at your return to ensure you've paid taxes and any associated penalties for early withdrawals.

Getting Help from a Tax Lawyer After You’ve Been Audited

Thorn Law Group is focused on helping taxpayers resolve all their tax issues. Whether you are facing an investigation because of undeclared offshore accounts, allegations of undeclared income or IRS accusations that you improperly claimed deductions, our firm can help you to respond to the IRS and handle your matters in the most efficient way possible. We will advocate for you and advise you during the entire audit process with the goal of helping you to minimize or avoid financial penalties and other consequences.

As a former attorney for the IRS Office of Professional Responsibility, Kevin Thorn knows the tactics the IRS takes when investigating and pursuing claims against taxpayers. When you need a lawyer who truly understands how the IRS works, Thorn Law Group is the firm to turn to. Give Managing Partner Kevin E. Thorn a call today at 202-349-4033  to find out how we can help if you're faced with an IRS investigation.