How Does a Tax Audit Work?

How Does a Tax Audit Work?

A tax audit is when the IRS decides to check all of the information you've given them about your income and assets to make sure that it is correct and you have paid the right amount of tax. When you submit your tax return, they have three years to start an audit, although this can be extended in certain circumstances. In the vast majority of cases, they will start the process within a year of filing.

If you're being audited, it's important to remember that this doesn't necessarily mean you have done something wrong. While suspicious people and organizations are more likely to be chosen, the IRS occasionally does random checks, so there might not be an issue at all. If in doubt, the best thing you can do is contact tax resolution specialists, who will be able to deal with the IRS for you and help you with the paperwork.

What Happens If You Owe the IRS?

In the last two years, many individuals and small businesses have suffered great losses, so it's not surprising that tax debt has climbed. In fact, it is estimated that over 18 million Americans are struggling with this issue. Despite the fact that we live in uncertain times and this issue is so widespread, the IRS is strict about such matters, and you will be penalized if they find out that you haven't been paying your taxes.

Whether you have simply failed to pay or you have understated your income, you will need to make up for this and pay them everything you owe. Depending on the severity of the issue, there might also be some penalties. If the IRS suspects that you have been dishonest for several years, they might extend the audit to cover past tax years, as well.

How Will the Tax Debt Be Collected?

There are several actions the IRS can take to collect unpaid taxes. Most likely, they will ask you to pay the remaining balance, and if you have the financial means to do so, this is the easiest and cheapest way to resolve the issue. However, many people might not have the necessary amount of money readily available. In such cases, a Notice of Federal Tax Lien can be filed. This is a claim against your property which protects the IRS's interest in your assets.

Another method commonly used is a Notice of Levy, which means that they can confiscate and sell your property such as house, car, but also your wages, benefits, and retirement income. They will also apply future tax refunds to your debt, so you won't receive them. These measures might sound drastic, but there are several ways you can negotiate with the IRS to make sure you can hold on to your property.

Are There Any Penalties?

In addition to having to pay all the tax you owe, you might also incur financial penalties, particularly if your actions go against the law. There are several levels of penalties, and most people simply have to pay a monetary fine. If you've never had a problem with the IRS before and you've always paid your taxes correctly, you can get your penalty dismissed by first-time penalty abatement.

Every year, around 2,000 people face severe consequences due to tax fraud. If the IRS suspects that you have committed fraud, your audit is likely to stretch out over several years, and you can face hefty punishment such as up to 10 years in prison. Whether you simply owe some tax or you are struggling with a more serious situation, contacting specialists who know all of the relevant tax laws and have a good relationship with the IRS is key.

The Benefits of Using a Tax Resolution Company

If the IRS has decided to audit you, it is worth getting in touch with a tax resolution company, no matter whether you owe the IRS or not. In addition to helping you with all the relevant paperwork and ensuring that you meet all deadlines, tax specialists can also negotiate with them.

That way, you might be able to pay your taxes over a longer time period, or you might even be relieved of some charges. With automated systems and easy ways to communicate with government officials, your tax resolution specialists can help you to avoid similar issues in the future, so your tax returns are always correct.

They Will Help You with Your Situation

Being audited can be extremely stressful, and you'll need all the help you can get. If you end up making a mistake during your audit, this could cause you more trouble, so involving specialists is crucial, Tax Alliance in Santa Ana can help you.

When you first consult with Tax Alliance in Santa Ana, we will have a look at your situation and figure out how we can best help you. Our tax specialists will analyze the documents you have received from the IRS as well as your own financial statements, then come up with a plan.

They Can Negotiate With the IRS

Tax Alliance in Santa Ana has been in existence for over 16 years, so we have plenty of experience with the U.S. legal system and the IRS. During our time working in this field, we have built up a positive reputation, and it is much easier for us to contact and negotiate with the IRS than it is for an individual. With our detailed knowledge of the tax system, we can find the best solution for you, then present it to the IRS.

Depending on your individual situation, you might be eligible for an Offer in Compromise, which means that you will only have to pay a portion of the tax you owe. Although it is hard to receive, people who will face hardship if they have to pay the full amount due can benefit from this program. Another option is to negotiate an installment plan, which allows you to pay your back taxes over a longer period of time.

They Help You to Avoid Problems in the Future

Once you've resolved your issue, it's important to stay on top of your taxes in the future. Tax Alliance can help you to file your taxes correctly and on time every year because we communicate with the IRS electronically, so are able to process your return much faster than you would be on your own. That way, you never have to worry about audits or being penalized again.


When you receive a notice that you're being audited, you should immediately get in touch with a tax resolution company, so you can figure out how you'll pay what you owe the IRS. Call or message us at Tax Alliance in Santa Ana, CA to find out more about how we can assist you. One of our tax specialists will be happy to work together with you and the IRS to find the best solution possible.

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Efficiency through Automation!

Because of advancements in our technology, we are able to communicate with the IRS electronically, its as if we are in the same office! Faster service and more cost effective!

Our Money Back Guarantee!

If you are not happy with our tax services within the initial 21 days, we will give you a 100% refund of services rendered, no questions asked!

Price Match Guarantee

You find it, we will match it! Tax Alliance will match and beat (by 10%) any competitive offer. Contact our office today and receive a free no obligation tax consultation.

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