A single tax audit notice from the Internal Revenue Service (IRS) is more than enough to send a chill down ones spines. For that reason financial experts advise people to follow the IRS guidelines for proper filing of tax returns. This will minimize the risk of inviting any tax audit; however, it does not ensure complete immunity from it. In such a situation, people have to know of ways to avoid tax audit and prevent the IRS from getting a tax levy decree passed against a default.
Here are some of the most effective ways to avoid tax audit harassment:
Honest deductions – Generally, people have the penchant to get as much deductions as possible. However, this is an unsavory attitude and it is unappreciable by the IRS. One should state deductions that one actually is entitled to. For instance, unreimbursed business costs (or receivables). In case of any doubt regarding the amount of deduction permitted by the IRS, one can take the help of tax widgets or consult Publication 587 of the IRS. The software will reveal the legitimacy of a deduction amount as per the IRS rule.
Regular payments – It is extremely important to meet the tax filing deadline set by the IRS. One should not lag behind in this since that may show ones non-compliance with the tax rules. Moreover, this is one of the primary reasons why the IRS targets a person or community. Every effort should be made so that the IRS marks a tax payer as a responsible and regular tax payer. In the event of any tax payment difficulty one should inform the IRS well before the April 15 deadline and pay a minimum amount as a bona fide attempt to comply with the federal laws.
Spotless preparations – Every tax payer should diligently record their whole year’s expenses, income, savings, liabilities, insurance costs and all the other financial documents in an organized manner. This will help in to act swiftly in case of a tax audit notice slapped by the IRS and settle any dispute before the actual auditing commences. Many a times, people fail to manage the tax audit process competently and may find themselves at the receiving end from the IRS. As a result, people have to struggle with tax levy charged by them. In this kind of situation, people can take steps to prevent the court from approving the tax levy charged on them.
The following tips will help in to prevent tax payers from succumbing to the tax levy charges brought by the IRS against them:
IRS communication – As soon as one is notified by the IRS regarding an impending tax levy, it is the duty of the tax payer to immediately establish communication with the agency. Usually, IRS takes this step when they don’t have any clue about the whereabouts of a delinquent tax payer. Before embarking on such a drastic step, the IRS mails the concerned person well in advance (minimum 30 days) prior, about the possible penalties.
Tax debt plea – It is a very good tool to prevent any sort of IRS wage garnishment or asset seizure as a result of tax levy enforced by the IRS. One can approach the IRS with an Offer-in-Compromise. This can lower the tax debt amount and in many cases drop several penalties as well.
Case status – Tax defaulters should keep themselves updated about the developments in their tax levy and other federal cases, so that they do not miss any payment deadline further. Tax payers must enquire about the status of their cases every 90 days. Moreover, tax payers need to keep in touch with their local IRS office, in order to get information about the tax debt relief appeal, filed by them. This should be done when they do not receive any formal notification from the authorities for at least 3 months from the date of filing the appeal.