IRS Audit Outcomes for DC Taxpayers

An audit by the IRS does not necessarily mean you will end up having to pay more in tax, or that you will be investigated for criminal conduct. There are multiple outcomes to an IRS audit which a Washington DC taxpayer should know about. If you receive notice of an audit, or believe that you will, you can contact our seasoned IRS audit attorney to take a look at your tax profile and determine the best course of action while the audit is occurring. We have Enrolled Agents and former Revenue Officers who can help you navigate this sensitive process using their knowledge of how audits work.

What Are the Potential Outcomes of an Audit?

The best audit outcome for the taxpayer would be one that results in no changes. In that case, the taxpayer prepared their return correctly and has support for all the positions taken, and the IRS agrees, with the report concluding no changes.

Alternatively, if the IRS finds errors the taxpayer is responsible for the increased tax and penalties, and any applicable interest. The worst outcome would be the finding of fraud, which would likely lead to a referral to the IRS Criminal Investigation Division.

When an Audit Reveals You Owe Money

When the IRS determines you owe more tax, then the balance will be due when the audit report is finalized. However, all collection alternatives are available, including installment agreements, offer in compromise, and currently not collectible status, and the IRS will have a 10-year statute of limitation to collect the balance once the audit is finalized.

When an Audit Determines There Were Criminal Actions

If there was a finding of potential criminal conduct, the IRS agent conducting the audit will refer the case to IRS Criminal Investigation Division, which will begin investigating the taxpayer. The IRS is obligated to disclose the referral to the criminal division, though just because the criminal division receives the referral, does not mean a criminal proceeding will happen. They conduct a preliminary review before deciding to move forward with a criminal investigation.

There is value in working with a tax attorney during the audit stage to help carefully steer the investigation away from any potential criminal investigation.

Bringing the Audit to a Close

The IRS will issue an audit report, and the taxpayer has 30 days to review and work with the supervising agent to resolve any items that they disagree on. After that 30-day period, they issue a final report which closes the audit. The taxpayer has an option to challenge anything in that audit with IRS Appeals or Tax Court, or the taxpayer can accept the changes as stated.

The IRS has the right to audit a taxpayer multiple times. However, they are only allowed to audit a tax year for that taxpayer once. Once they have analyzed one particular tax year, they cannot go back to it again later for some other investigation, but subsequent years can be audited.

An IRS audit does not become public record. However, if the taxpayer decides to challenge the final report in U.S. Tax Court, that case will be public information.

Call a DC Attorney to Discuss Your Options After Learning the Outcome of an Audit

Not all IRS audit findings will be negative or bring criminal referral. If you work with a trusted tax attorney, we can make choices that improve your odds of a decent result. For more on the potential outcomes of an IRS audit in DC, call Pontius Tax Law now.