HOUSTON, July 25, 2011 /PRNewswire/ -- On the heels of a record reporting year for taxes, taxpayers should be wary – or at a minimum more informed – about audits from the IRS, according to Patrick Cox, CEO of TaxMasters (TAXS), the leading tax compliance and repayment services provider in the nation. According to Cox, the IRS will send out a record number of audits which can be misleading and even wrong.
"Over the past few years the IRS has been shifting gears to use correspondence audits – notices mailed to taxpayers usually showing an alleged discrepancy in a tax filing and asking for a manageable amount of extra money that is owed," Cox said. "From my experience, most taxpayers – who did their taxes online or had an accountant or friend do them - are scared of the IRS and don't know enough about their tax filings to argue the audit. Instead of making sure the IRS assessment is accurate, I think most taxpayers just cut a check."
The latest Taxpayer Advocate Report showed that of the more than 1.6 million Americans who were audited last year, 78 percent received a correspondence audit, while only 22 percent were selected for an in-person examination. A large majority of the correspondence audits are sent due to unqualified or overstated tax deductions.
"Returns claiming tax deductions are the lowest hanging fruit for the IRS in a correspondence audit," says Cox. "Unfortunately, there are an alarming number of taxpayers that make simple mistakes on the amount of deductions and types of deductions they make and wind up being easy targets for the IRS. A few examples of typically-encountered discrepancies include unreported pension income, home mortgage interest, and cash charitable contributions."
After receiving a correspondence audit in the mail, many taxpayers do not know they have a right to appeal IRS adjustments to their tax liability. Additionally, the average taxpayer does not understand how to engage the IRS even if he or she has clear evidence in favor of claims and deductions.
Cox adds, "Even if you are 100 percent certain that you have not made a mistake on your tax return, you may want to consider contacting a tax professional before responding to the IRS. Certainly if you have any doubts at all, you should seek the help of a tax professional. Some audits may be simple enough to fix or a small enough dollar amount to pay, but determining where and when mistakes are made is crucial to filing accurate returns and remaining in compliance."
About TaxMasters, Inc.
TaxMasters, Inc. (OTCBB: TAXS) is the first publicly traded tax representation firm in the United States. Started by Patrick R. Cox in 2001, TaxMasters offers a full suite of compliance and repayment services to taxpayers across the country facing seemingly insurmountable tax problems and substantial federal tax debt. Tax services from TaxMasters include IRS consultations, tax return preparation, settlement analysis, and assistance with IRS automated collections, Revenue Officer involvement and collection due process.
Employing over 250 people, TaxMasters leverages the expertise of ex-IRS agents, enrolled agents, attorneys, CPAs, and sales consultants ready to counsel and assist the US taxpayer with their specific tax problems today. TaxMasters is not a law firm or a CPA firm.
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Any forward-looking statements, as defined in the Securities Exchange Act of 1934, in this release (often identified by such words as "believes," "expects," "beginning," "intended," "planned") regarding future expectations, objectives, and plans for TaxMasters, Inc. are based on opinions and estimates of management at the time the statement was made. Various known and unknown factors may cause actual results to be materially different from the expected outcomes. TaxMasters, Inc. does not, as a matter of policy, update or revise forward-looking statements. Actual results may vary materially.
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