If you’re a New York resident, receiving official correspondence from the IRS can be nerve-wracking. It’s a situation made worse when you open the envelope to find a notice that you’ve been selected for a tax audit. To help you feel less apprehensive about it, this article gives a basic overview of IRS audits and tax audits in New York.
What Is the Purpose of an IRS Audit?
The IRS enforces tax law and collects taxes from individuals and businesses in the US. In the process, the IRS examines all tax returns to ensure each individual or business has reported all income and taxes correctly, and remitted the correct tax to the government. Sometimes, the IRS deems it necessary to obtain additional confirmation—a process known as an IRS audit.
To begin an audit, the IRS sends correspondence by mail, requesting additional documentation for the tax year in question. In most cases, the IRS orders audits within three years of filing, while serious tax issues warrant audits extending as far back as six years. If you are a New York resident and have received an audit notice, begin by identifying the tax year the audit targets.
Understanding Your Audit
Seeking IRS audit and tax audit help allows you and your tax attorney to determine the reason for your audit. While some returns are randomly selected, most individuals have been screened by the IRS’s computer algorithm, which can identify issues such as rounded numbers and other deviations. Other situations that make your returns more likely for audit include affiliations with individuals or businesses currently undergoing an audit or filing Schedule C.
Your audit notice will also notify you whether you’ll experience an in-person audit – either at a nearby New York IRS office or your home. The other alternative is a mail-in audit, which will require you to assemble your documents and mail them to the address specified. While documentation can differ based on the reason for your audit, be prepared to produce bank statements and proof of expenses like bills, receipts, canceled checks, trip logs, and loan documents.
Do You Need IRS Audit & Tax Audit Help in New York?
The documents you’ll provide should support your tax filing and back your assertions that you’ve paid the correct taxes. However, be careful not to give too much information—submit only the documents requested and documents that are pertinent to the tax matters at hand. In addition, make copies of each document and retain the originals for your records.
The IRS may decide not to make any changes or may require you to pay additional taxes. At this point, you can choose to accept or contest the findings—you’ll need to read and sign the provided forms, indicate your choice, and schedule payment. To ensure you have developed a full understanding of your options at this point—as well as throughout the audit process—it’s crucial to seek the help of a New York tax attorney.
How Delia Law Can Help You
IRS audits are stressful and complicated, and most New York residents require professional guidance. Delia Law’s tax attorneys have years of experience regarding audits, as well as a great deal of knowledge about many other tax issues. We’ll help you identify the issues that resulted in your audit in the first place and always endeavor to resolve your audit with the best possible solution for your tax situation.
Seek the Help of a Qualified Tax Lawyer or Attorney
If you live in New York, seeking the assistance of a reputable tax firm like Delia Law should be your first step. Your attorney can assist you in determining the reason behind your audit and help you provide documentation to strengthen your case. At the audit’s end, your attorney will help you understand any proposed changes to your tax filing, and—if you disagree with the changes—guide you through mediation or help you file an appeal.
Delia Law can assist you with IRS audits and tax audit help in New York even after your audit has reached its conclusion. In cases where the additional tax debt adds a stressful burden to your financial situation, we can help you seek relief via an offer in compromise. Or, if your tax debt goes into collections, our attorneys can help you resolve the matter before wage garnishment becomes necessary. From beginning to end, Delia Law offers knowledgeable, professional assistance.
About New York Tax Laws
Like most other states, New York tax law imposes state taxes in addition to federal taxes. State taxes include income taxes, sales taxes, property taxes, and estate taxes. Income taxes apply to forms of earned income such as salary or wages, tips, commissions, and bonuses, as well as paid leave and unemployment. Additionally, income taxes apply to unearned income such as business income, interest, dividends, royalties, even gambling winnings. Government pensions are exempt from taxes.
Depending on income level, you’ll pay taxes on each paycheck—anywhere from 4% to 8.82%. The income thresholds for individual tax filers include a 4% tax rate for the first $8,500 and increase incrementally until the final threshold of $1,077,500 and 8.82%. These tax rates are among the highest in the country—fortunately, New York allows most of the same itemized deductions and tax credits used on federal returns.
If you live in New York, you’ve likely noticed that other tax rates, including property and sales tax rates, tend to fluctuate depending on location. New York allows localities to set property and sales taxes to be used to build and maintain roads, schools, law enforcement, and fire department facilities. Localities can also grant exemptions to senior citizens, those with disabilities, and veterans.