The sitting president of the United States reports he is unable to provide his taxes to the American people because they are the subject of a tax audit. If you are contacted for a civil tax audit, are you looking at a decade of tax hassle? Probably not.
It is true that President Trump’s financial affairs have been under the scrutiny of the Internal Revenue Service (IRS) for years. Although the IRS has a mandate to audit the tax returns of the President and the Vice-President, the current audit of Mr. Trump’s financial affairs derives from a series of financial and tax irregularities that date back to 2008.
The triggering event for his current civil tax audit is the claim by Mr. Trump for a whopping $1.4 billion loss in 2008 and 2009. By the reckoning of his tax accountant, Mr. Trump was owed a refund of $72 million in 2010. The calculated loss and subsequent refund also worked to eliminate income taxes going forward. While maintaining the illusion of ongoing wealth, approximately $421 million in debt personally guaranteed by Mr. Trump is coming due within the next several years. No word on what scheme will alleviate or float that hardship downstream to the future.
For any taxpayer, it is not true that you are unable to provide or disclose your taxes during the pendency of a tax audit. Beyond the unreal air of the ongoing Trump tax audit, here are some prime takeaways to consider if your numbers are up for an audit by the IRS:
- Unless you claimed a $72 million tax refund, it is not worth your time to figure out why you were targeted for an audit at the outset. Over the course of the audit, a focus might be identified, or you might just have been picked at random. More likely there may be a singular or consistent irregularity in your accounting or you may be associated with someone involved in a tax controversy.
- If the IRS has identified you for audit, you will be notified by mail—not by telephone.
- The more complicated your taxes, the longer your audit may take. Most often audits are completed in a matter of months. In a pandemic environment and slowed mail delivery, the time frame may stretch longer—but likely not a decade.
- The IRS usually looks at records and returns within a three-year time period. In the event of a serious error, or a potential tax crime, an audit may go back six years.
- The outcome of your tax audit may require no change to your returns or there may be findings with which you agree or disagree with changes noted by the IRS. Depending on the outcome, you may agree to pay adjusted fees or you can appeal or mediate the findings.
If you receive a letter from the IRS, speak with an experienced tax lawyer before responding. You can discuss questions you have or review, or go over irregularities in your returns. Preparation at the beginning can save you time, money, and a lot of worry in the end.
Cleveland tax attorneys deliver aggressive representation if you are charged with a tax crime
The legal team at Robert J. Fedor, Esq., LLC skillfully represents clients responding to allegations of offshore tax violations, tax fraud, or other tax litigation. When you need experienced tax advice locally or internationally, call 800-579-0997 or contact us.