How Edrien Inc. Helped Their Clients During An Audit
As a family-owned accounting business, we evaluate all your financial records and ensure they comply with tax regulations and applicable laws. However, we sometimes deal with clients who face an audit by the Internal Revenue Service (IRS) for intentionally not declaring their additional income or misdirecting their income at the time.
We believe that the fiscal health of your business is best left to a highly experienced professional. They advise you on tax issues, assist you with filing tax returns and if you find yourself facing an audit, they should be able to guide you through the audit process and make it as stress-free as possible.
At Edrien Inc., we provide relevant information to our clients and are focused on keeping the financial impact to a minimum. Keep reading to learn about how we helped clients face an audit.
The Challenge: Helping a client facing an IRS audit.
While small and medium business owners are often usually experts in their field or industry, rarely are they either accounting, tax or legal experts. Some owners tend to run their businesses without having enough information about the tax rules in America. When they take on the responsibility of filing taxes on their own, they can commit a costly mistake. If their tax return doesn’t match the income information that the IRS has of them, it can lead to a CP-2000 notice from the Internal Revenue Service.
We once had a client who misdirected their home sale of $275,000; as a result, the IRS audited and taxed them an additional $125,000 for not declaring their home sale.
The Solution: Using expert help.
When an audit occurs with a personal client or any taxpayer, the first thing we ask for is the CP-2000 notice letter along with the IRS or the State notice letter.
It then took us almost six months to correspond with the IRS. Our first attempt was to declare the home sale on the amended tax return and offset it as it was my client’s first home but the bank ended up taking her house.
I explained to the IRS that there was a taxable gain. However, the IRS still tried to penalize her for not maintaining the five-to-seven year residency. So, my last attempt was to show the original price of the home. Fortunately, my client had the original home sale of $475,567. After composing a short letter and presenting them with the original home sale, the IRS decided not to pursue my client. I explained to them that it was declared as a gain, so my client had the right to claim the lost property.
The Bottom Line
At Edrien Inc., we investigate the cause of your CP-2000 notice and ensure corrective action is taken. Our firsthand knowledge and cohesive client services have helped clients on an advance ruling or consent to change tax accounting forms and methods from the IRS. Our clients continue to stay with us knowing that we’re able to take the stress off of them, trusting that we have performed their tax returns as per the guidelines of the IRS.
To get in touch with our tax accountants in Baltimore, MD, click here. To learn more about how we can help you, please click here.