Nothing strikes fear in the hearts of people more than receiving an IRS Audit letter in the mail. Audits take significant time away from your business and family, requiring you to gather mounds of records substantiating each and every item reported on your tax return and develop a comprehensive understanding of tax law.
According to Forbes.com, in an effort to close the estimated $350 billion tax gap, the Internal Revenue Service is likely to increase their enforcement program budget by $293 million in 2011. This increase indicates that the number of audits is likely to rise. Over the past decade the number of individual tax returns audited has gone up from 1 in every 202 in 2000 to 1 in every 90 in 2010. In addition, the IRS has increased their audits of small businesses by 30% over the past 5 years.
To further complicate matters, the IRS is now issuing “soft notices” – or warning letters – to taxpayers seeking self-compliance. The soft notice asks taxpayers to review their tax returns and file amended returns if their original returns were in error. It also advises taxpayers that the IRS will carefully review future returns. Soft notices are sent in situations where the IRS received documentation showing income that appears to be under reported on the tax return and an audit notice was not sent.
In response to these trends, Stone, Rudolph & Henry is pleased to continue to offer an additional service to you. Our “Audit Protection Fee” has been established to take the worry away from additional accounting fees resulting from an audit or soft notice.
Should your 2011 tax return be selected for examination, our service provides that we will represent you before the Internal Revenue Service through the Revenue Agent’s Report at no additional cost. Generally, such representation takes a minimum of 10 to 20 hours and fees in excess of $1,500 are not unusual. Also, should you receive any nuisance letters regarding your 2010 return, our service provides that we will research and prepare up to two responses on your behalf to the