IRS Audits in Bethesda
& Finding an IRS Audit Lawyer
The IRS (Internal Revenue Service) is the government’s official agency for enforcing US tax laws and collecting taxes. An IRS audit reviews an individual’s or a business’s financial records to ensure that the information reported on their tax returns is accurate and complete. The IRS can choose to audit a tax return for various reasons, such as random selection, high income, large deductions, or discrepancies found during previous audits.
An audit can be stressful and time-consuming, but it is vital to understand your rights and responsibilities as a taxpayer in Maryland. If you are selected for a formal audit, you will receive a notice from the IRS, either by mail or email, indicating the reason for the audit and the documentation required to support your tax returns. It is advised to immediately seek the help of a local Bethesda tax professional, such as a tax attorney, to guide you through the audit process.
Audits Can Be in Person or by Mail
When selected for an audit, you may be required to attend an in-person meeting at the IRS office, or the audit may be conducted by mail. The type of audit you receive will depend on the specific issues being examined and the documentation required to support your tax returns. Some common types of audits include correspondence audits, office audits, and field audits.
A correspondence audit is the simplest type of audit, and it is conducted by mail. The IRS will send you a letter requesting additional information or clarification on certain items reported on your tax return. In addition, you will be asked to provide documentation to support your claims, such as receipts, invoices, or bank statements. If you respond promptly and accurately to the letter, the audit may be resolved without further action.
An office audit is a more comprehensive review of your tax returns, and it is conducted at an IRS office. During the office audit, you will be asked to bring the required documentation and meet with the auditor. The auditor will examine your records and ask you questions about the information reported on your tax return. The audit may take several hours or several days, depending on the complexity of the issues being examined.
A field audit is the most extensive type of audit, and it is conducted at your place of business or residence in Bethesda. During the field audit, the auditor will examine your records in detail and may ask to see your financial statements, bank records, and other documentation. The audit may take several days or weeks, depending on the scope of the examination.
Preparation and Cooperation Are Key
Regardless of the type of audit you receive, be prepared and cooperate with the auditor. You should promptly provide the requested documentation and be honest and accurate in your responses to the auditor’s questions. If you disagree with the auditor’s findings, you can appeal the decision, and you may wish to seek the help of a tax professional to assist you with the appeal process.
An audit does not necessarily mean that you have done something wrong. The IRS may simply be seeking clarification on certain items or verifying the accuracy of the information reported on your tax returns. However, it is crucial to be prepared and to provide the necessary documentation to support your claims. In addition, an audit can result in changes to your tax returns, which may result in additional taxes, penalties, or interest owed to the government.
In some cases, an audit can also lead to a criminal investigation if the IRS suspects that the taxpayer has committed tax fraud or evasion. In these situations, it is imperative to seek the help of a tax attorney, as the consequences of a criminal conviction can be severe, including fines, imprisonment, and loss of professional licenses.
Delia Law Can Help With IRS Audits in Bethesda, MD
At Delia Law, we specialize in tax law and resolution services in Bethesda, Maryland. As experienced tax attorneys and enrolled agents, we understand the stress and complexities of undergoing an IRS audit. That’s why we offer comprehensive assistance to individuals and businesses facing this situation.
Why You Should Always Consider Hiring a Tax Lawyer
We work with our clients to ensure that they have all the necessary documentation to support their tax returns, and we represent them during the audit process to protect their rights. Whether our clients are facing a correspondence audit, an office audit, or a field audit, we are here to help them navigate the IRS audit process confidently.
If the audit results in changes to their tax returns, we can assist our clients with the appeals process, negotiate a payment plan with the IRS, or help resolve any other tax issues that may arise. Our goal is to provide personalized and practical solutions to our client’s tax problems.
If you are facing an IRS audit in Bethesda, Maryland, let us help. We can answer your questions and provide the support and guidance you need to resolve your tax issues. Contact us today to schedule a consultation.
Maryland-Specific Tax Laws
Maryland has a progressive tax system, which means the higher an individual’s income is, the higher the percentage they will pay in taxes. Maryland has special tax benefits for military retirees, lower income families, those paying for childcare, as well as for those aged 65 and older.
There are four types of taxes in Maryland:
- State income tax. The state tax rate for personal income tax begins at 2%. This is applied to anyone making under $1,000 per year in annual income. It increases up to 5.75% for anyone making over $250,000 annually. This is one of the lower state income tax rates in the United States.
- Local income tax. There is also a local income tax, which is levied by counties and cities. For convenience, these are withheld during income tax season by the state, and they vary based on the locality. For example, if you live in Allegany County, you paid a .0305 tax rate in 2021. This differs from residents of Baltimore County, who had a .0320 rate. It is important to note that this income is based on the county you live in, not where you work.
- Sales tax. With each purchase in Maryland of a good or service, a 6% sales tax is automatically applied. This does not include every purchase. Groceries, prescription drugs, and gasoline are a few examples of items not subject to sales tax. However, a business is required to collect a 9% tax on any alcoholic beverages sold.
- Property tax. You must pay property taxes in Maryland as well, and the tax rates vary by county. The average effective tax rate is 1.06%. While this might seem low, it is balanced by the high property values in the state. The median home value in Maryland is currently over $400,000 and varies based on proximity to the city of Maryland and other populated areas.