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Tax Audits
Tax audit refers to the examination and verification of returns and other relevant tax documents submitted by a legal entity or an individual to the state’s tax agency. The audit is usually conducted by a certified public accountant.
1,102 Questions
Pay them, on time, or make so little income (and of yourself) that you owe none (be a burden rather than a prt of society).
What is the importance of auditing to an entity?
auditing helps to detact error and fraud at an early stage
It also helps management to improve or comeup with better strategies to quality management system .
Is income tax a direct tax or indirect tax?
As many people know, the state and federal government level taxes are the direct form of taxation;for example, corporate taxes are another form of direct tax--those taxes levied against income earned by corporations. soc sec , medicare, estate and gift taxes are more types of direct tax, as is the income tax charged by the state you live in. The simple definition of a direct tax is one that you have no choice in paying.
I gather the penalties your talking about are from ot payig enough estimated taxes during the year?
There are a number of different calculations for this, including safe harbors and ones that account for gains made late in the year.....look at all of those options and see if what you did fits one.
What merit good does the US government provide through a payroll tax?
Health Care is a merit good that the US government provided through a payroll tax.
How often can the IRS audit an individual?
Pretty much as much as it wants or feels necessary.
However, if the IRS audits you two years in a row and finds no change to your tax return they cannot audit you again for that specific item that was unchanged for several years.
How much taxes do i have to pay if im self employed?
In 2009, you will pay the regular state and federal tax rates on all of your income, including your self-employment income.
In addition, you will pay a Social Security tax of 12.4% on the first $106,800 of your net self-employment earnings (reduced by other earnings subject to SS) and a Medicare tax of 2.9% of your net self-employment earnings with no limit.
You should also investigate whether you need to make quarterly estimated tax payments to avoid possible penalties for underpayment.
Can you file taxes with more than one company?
You can use a different company every year. You don't have to use the same one you used last year.
You can even ask two different companies to prepare your returns and then compare the results to see who did a better job.
But you can only file one time. Don't ask two companies to both file.
If one company made a mistake and you don't trust them anymore, you can ask another company to file an amended return for you.
How many times can IRS perform an audit?
As often as it feels that it is necessary for the proper administration of the tax code.
RR is the accumulated net profit for the company.
Eg, the is start@ 2009 ,
NET PROFIT RR
2009 90million 90million
2010 100million 190million
2011 100million 290million
2012 100million 390million
Is it true that there are no legal penalties for not filing a return?
26USC6012 requires anyone having more than a certain amount of income to file a tax return. 26USC7203 makes willful failure to file a return a crime punishable by up to a year in jail and/or a $25,000 fine. Neither of these laws carry any requirement that you owe money. It is extremely rare, but people have been successfully criminally prosecuted for failure to file even though they might owe no money. See Spies v. United States, 317 U.S. 492, 496 (1943); United States v. Wade, 585 F.2d 573, 574 (5th Cir. 1978).
Is the typical guy whose only source of income is a W-2 on which he had way too much tax withheld going to get prosecuted? No. Maybe if he gets arrested for something else like drugs, a tax charge might be piled onto his case. Or if he sends threatening letters to the IRS commissioner, they might take revenge. But not typically.
If you owe money or if the IRS later adjusts your return and you owe more money than was stated on your return, there will be a penalty of 5% per month or partial month until the return is paid, up to 25%. If the return is more than 60 days late, the minimum penalty is $100 or 100% of the balance due that should have been stated on your return, whichever is less.
If you just moved to the state do you have to pay state taxes?
In the year in which you moved to a state, you will be a part-year resident of both your old and new states. You will have to file tax returns in both states. Most states have a special form or a special attachment to the regular form for part-year residents.
If you moved in 2009, you will have to file in both states for 2009, but not in 2008.
People who move early in the year sometimes run into a little snag: The federal government shares tax return information with the states. They share it with the state that you put in the mailing address on your federal tax return. So if you moved in early 2009, you will probably put your new address on your 2008 federal return. The feds will send your 2008 return data to your new state and a few years later you may get a nasty letter asking why you didn't file a state return for 2008. Don't panic. Just reply to the letter and explain. Or you can head it off by filing a non-resident return for 2008 with your new state showing zero income, but that is not required.
I received the same code, 8001, From what I understand, It means that the IRS has pulled my return and they are redoing it. In my case to include the Injured Spouse Form that they failed to include with the return when I first paper filed it back in Feb 2010. They claimed they did not receive it, so I had to resubmit it to them, and I have been waiting this whole time, a total of 16 weeks to receive my refund, which by the way I still have not gotten. I just received the code notice yesterday. Hope this helps
Is a shareholder responsible for payroll tax debt?
=It all comes down to the one-on-one interviews by all parties involved and how the IRS agent will evaluate who will be held responsible. Your interview will be twisted around on you. If you willfully did not pay the taxes and had the ability to, yes you may be responsible. If you were the responsible one to pay payroll and knowingly avoided to pay your payroll taxes, yes you may be held responsible. If you're on the signature card at the bank but say you never even wrote a check, my situation, you are responsible. I personally was not aware of our company missing payments as I was not involved in those dealing and only work limited hours dealing with giving clients updates and never doing payroll but these loser are coming after me too. The idiots we have had to deal with in the Twin Cities are just horrible and our government better take a hard look at this issue because it is about to become a major one! I am making it my mission to be the advocate to all those out there who are innocently shot between the eyes by these scums of the earth! This is an absolute attack on innocent people with no remorse and the agents who knowingly do this should also have to suffer the consequences of their actions!!!=
How far back can you be tax audited?
You can (theoretically at least) be audited forever.
However, if the results of the audit show that you owe more taxes, there are limits on how far back the IRS can collect the taxes. Generally, taxes cannot be collected three years after you file a return. If you understated your income by 25% or more, then the limit is six years. If there is willful tax fraud involved, there is no limit. If no return was filed, there is no limit.
Even though the IRS might not be able to collect taxes from more than 3 or 6 years ago, they might want to audit an older return if you are carrying over amounts such as capital losses to a more recent year. Even though they might not be able to collect underpaid taxes from seven years ago, they can disallow a carryover you are taking that resulted from a transaction seven years ago. Or they might want to audit older tax returns if there is suspicion of criminal activity or if you are ever nominated to a prominent political office.
Note: Limits on state taxes may be different and vary by state.
What are the three principles of a sound tax system?
I' m not sure how much this helps, but most tax systems are subject to a rule known as the 4 R's: Revenue, Redistribution, Repricing, Representation Revenue ( in order to gain funds for the various functions of government), Redistribution (Organising wealth evenly accrross the board, in an effort to stem class inequality and commonly undertaken through Proportianl taxation) , Repricing (as with levies on external trade items ie. tobacco and more recently carbon taxes) and Representation (the authority only has the power to implement taxes if they maintain accountablility and responsibility with the way it is spent, in other words "no taxation without representation"). This is a pretty strong principle of any sound tax system. Hope this is useful...
What type of tax is income tax?
****NOTE**** Judy Olmsted has plagiarized my post.
****END of NOTE****
Income Tax is an INDIRECT TAX. The Supreme Court has made this point very clear in 1916 only 3 years after the 16th Amendment, commonly referred to as the Income Tax amendment, was ratified. The 16th Amendment confirms that the Income Tax can ONLY be imposed under the category of Indirect. The 16th amendment is a moot point in the scheme of things anyway. All it did was to confirm Congress' taxing power by the US Supreme court concerning income tax as an indirect tax and nothing else!
Income Tax is an INDIRECT tax by it's very nature. It is NOT a direct tax as others here have suggested. The 2 US Supreme Court Cases in 1916 settled that this very question are as follows:
BRUSHABER v. UNION PACIFIC R. CO., 240 U.S. 1 (1916)
AND
STANTON v. BALTIC MINING CO, 240 U.S. 103 (1916)
The Court said specifically in the Stanton case the following:
" it manifestly disregards the fact that by the previous ruling it was settled that the provisions of the 16th Amendment conferred no new power of taxation, but simply prohibited the previous complete and plenary power of income taxation possessed by Congress from the beginning from being taken out of the category of indirect taxation to which it inherently belonged, " So here we can see, beyond ANY shadow of a doubt, that the court confirms that Congress can lay an income tax but ONLY as an indirect tax.
And as a side note, most tax professionals do NOT read the law to determine who is liable for the tax. Most tax professionals read IRS publications and just ASSUME anyone who makes money now owes an Income Tax. The most important aspects are glossed over like whom is subject to the tax, whom is liable for the tax (yes, it's different than whom the subject is), under what circumstances domestic US source income becomes taxable. So the who what when where and why are for the most part discarded as important by practically anyone whom works in the tax industry.
IRS Publications tell the story a bit different than a tax "professional" would. IRS Publications are sort of like "New Letters" put out by the IRS to the tax industry, including mostly ALL CPA's and Tax "Professionals". The IRS has a manual available on their website which any one can go read. Here's what THEIR OWN manual says about their own publications:
4.10.7.2.8 (01-01-2006)
IRS Publications
"IRS Publications explain the law in plain language for taxpayers and their advisors. They typically highlight changes in the law, provide examples illustrating Service positions, and include worksheets. Publications are nonbinding on the Service and do not necessarily cover all positions for a given issue. While a good source of general information, publications should not be cited to sustain a position."
The IRS has plainly stated in their OWN manual that Publications are NOT to be cited to sustain positions about the LAW even though that is what all tax professionals do anyway. This is because IRS publications and pamphlets are NOT the law. The IRS has already vindicated themselves from people who WRONGLY use publications like law.
So hopefully this has gotten you on the proper path to actually understanding what the "Income Tax" actually is and especially what it ISN'T! And, this is just the tip of the Iceberg of the mis-understandings the general public have about Income Tax law. So next time somebody says it's an direct tax, you can confidently re-correct them and confirm that it is, beyond a shadow of a doubt, an indirect tax.
Disadvantages of financial audits?
Financial statements give an idea about the financial position of the company, however, there are some limitations of the financial statements. The first limitation is that a financial statement ignores the productivity and the skills of the employees in an organization. Management Decision Analysis Report gives an idea about it but financial statements are unable to evaluate the skills which a company has. Secondly, balance sheet does not give timely and relevant information because it is based on historical costs and it does not give a fair idea about the current position of the company. There are different accounting measurement systems therefore, use of different techniques by different companies can make the comparisons of financial statements difficult. Moreover, income statement is considered a fiction because cash is king and income statement ignores this fact.
If you fail to claim a schedule k-1 how far back can the IRS audit you?
see its alot to it just put yo mind to it ya heard piece out
How many years in a row can the IRS audit you if they found nothing wrong in previous audit's?
They can audit you as many times as they want, and even more than once in a year. No matter how many years they looked at an issue and approved it, that does not mean it is acceptable handling and they can challenge it at any subsequent year.
IS the tax on capital gains considered a voluntary tax?
Yes. Virtually all income taxes in the US are voluntary. That means the person responsible for them voluntarilarly, on his own, reports and pays them. Not that he has a choice about paying them or not, but how it is done. All the alternatives, which were used when that term was coined, were taxes basically imposed arbitrarilarly and taken by force. The Kings men came and said -"we will take 5 bushels of vegetable, 1 cow for the Kings table..and a barrel of that wine for our collecting it", and essentially came back whenever they wanted. Or you were told to bring an item of value to the rulers...again whenever they wanted and if you didn't you were killed and it was taken anyway. The King/Ruler/Emperor really owned everything, and any business was allowed only under his approval/gift and partnership. By the way, this all has been discussed many times in Courts...so many times, with so many more literate and researched answers...that now the Courts and Law has made it that trying to present an argument that "voluntary" means you have a choice to pay or not, is considered frivalous and tax protester and immeadiately dismissed and a triple the tax penalty.
Who is responsible for cpa's error on your tax return?
YOU are always responsible for the tax that is due on your return. However, industry standard normally is, if there was an actual error on the return, not just a possible position taken to help you that didn't hold up under IRS scruitiny, that any penalty (not interest) will be paid by the preparer. That way you only pay what you should have any the interest equals what you gained by keeping the extra money.
What are the rights of the persons being audited?
Basically none if you are talking about a government audit.
Any attempt to conceal information or mislead the auditors is considered illegal. Government audits are normally done under performed within the legal system and structure of the country in which you live; generally they give auditors the right to access all relevant financial information (not necessarily personal information) that pertain to the audit.
