Important Fact You Should Know About the IRS Audit and Tax Penalties
- January 12, 2020
- Posted by: Platinum Tax defenders
- Category: Tax Relief
Receiving notice that you are under an IRS audit is terrible enough. But what if we told you there are penalties associated with an IRS audit? It’s true—if you are undergoing an IRS audit, there are IRS audit penalties related to that. The IRS penalty amount will vary, depending on what they uncover during the IRS audit. However, no matter how high or low the IRS audit penalty is, it’s an added cost on an already piling tax debt. Taxpayers rarely emerge from an IRS audit without owing additional taxes, plus penalties. However, working with a tax resolution specialist can help you pay fewer taxes and penalties in the end. Below we share with you nine facts you should know about IRS audit penalties. If you’re facing an audit from the IRS, call the professionals at Platinum Tax Defenders immediately for a free consultation.
Penalties Result from Filing an Inaccurate Tax Return
Should the IRS find that you filed a substantially inaccurate tax return, you could face accuracy-related tax penalties. The IRS audit penalty for an erroneous tax return is 20 percent of the amount you underpaid. In some severe cases, the IRS audit penalty can increase to 40 percent of your total tax underpayment. Seeking out the help of a tax resolution services firm can help you determine what, if any, accuracy-related tax penalties you may incur.
Tax Return Inaccuracies That Result in an IRS Audit
There are several types of accuracy-related penalties that can result in a tax audit, some of which are below.
- Failure to adhere to federal tax code rules, like failing to file a tax return
- Failing to follow IRS rules and regulations when filing your return
- Understating your income by $5,000 or 10 percent, whatever is greater
- Misstating the value of property
- Overstating pension liabilities
- Understating a gift or estate
- Any understatements related to reportable transactions
Failing to Pay Taxes after an Audit Can Result in Penalties
If you don’t pay the taxes you owe after an audit, then the IRS can assess a penalty. Typically, the IRS audit penalty for not paying taxes owed is 0.5 percent for each month the tax goes unpaid. Once you receive the IRS notice regarding taxes you owe, you have 21 days to pay the owed taxes. If you don’t pay the taxes within 21 days, the IRS can start charging the IRS audit penalty. Additionally, the IRS can charge a 3 percent annual interest to your penalty amount if the IRS audit results in:
- Accuracy-related penalties
- Fraudulent failure to file a tax return
- Civil fraud
Should your IRS audit penalty amount to $100,000 or less, you have 21 days to pay in full. However, if the penalty is more than $100,000, you have ten days to pay before the IRS starts tacking on interest.
IRS Audit Penalties Can Result from Civil Fraud
If the result of your IRS audit is civil fraud, you won’t necessarily be going to jail. However, the IRS will charge you with a 75 percent penalty. This IRS audit penalty will apply to any tax underpayment that was a result of fraudulent activity. However, remember when we discussed the accuracy-related penalties above? Accuracy-related penalties will not apply to taxes you owe as a result of civil fraud. What this means is, the IRS is kind enough not to charge you a penalty on top of another penalty. If you are involved in a civil fraud case, or any IRS tax audit for that matter, consult a tax resolution professional. A tax relief expert can help you determine the best course of action when navigating IRS tax audits.
Failing to File a Tax Return Can Be Fraudulent
When you deliberately fail to file a tax return, that’s considered fraudulent failure to file a tax return. If you mistakenly think you didn’t have to file a tax return and the IRS finds out, they will charge you with failure to pay penalties. However, fraudulent failure to file penalties can be a civil or misdemeanor criminal offense. Civil charges are much more common in fraudulent failure to file cases. If an IRS audit has found you guilty of fraudulent failure to file, call a tax resolution specialist as soon as possible. The professionals at Platinum Tax Defenders also work with experienced tax attorneys who can represent you before the IRS. If you face criminal charges, you could get up to a year in jail plus $25,000 in fines for each year you failed to file. For criminal charges, the statute of limitations is six years. However, there is no statute of limitations for civil charges.
You Can Face Penalties and Jail Time for Filing a Fraudulent Return
If an IRS audit finds you guilty of filing a fraudulent tax return, you could face up to three years in prison. Additionally, filing a fraudulent tax return can result in up to $100,000 in fines. If you are at risk of an IRS audit or have recently gone through an audit, call a tax resolution expert as soon as possible. A tax relief professional can help you navigate any fines and penalties as a result of an IRS tax audit. Additionally, tax relief services firms employ tax attorneys, who can also help you when faced with the IRS in court.
Tax Evasion Penalties from an IRS Audit
If an IRS audit or investigation finds you guilty of tax evasion, you could face up to five years in prison. Additionally, tax evasion will land you with up to $100,000 in IRS penalties. You should seek out the help of a tax attorney immediately if you’re facing a tax evasion conviction.
Requesting an Audit Reconsideration from the IRS
If an IRS audit results in more taxes and penalties, you can request an audit reconsideration from the IRS. Any time you are attempting to negotiate with the IRS, it’s beneficial to work with a tax relief expert. Tax resolution professionals have years of experience negotiating with the IRS. Speaking with the IRS can be very daunting; a tax relief professional makes it easy. There is specific documentation you’ll need before asking the IRS to reconsider your audit results, which a tax relief professional can help you with too.
Tax Relief Options after an IRS Audit
If the IRS does not grant your audit reconsideration, there are other ways to obtain tax relief. Tax resolution experts at Platinum Tax Defenders can help you determine which tax resolution plan is best for you. Both an Offer in Compromise and Penalty Abatement could be options for those who have more tax debt as a result of an audit. In an Offer in Compromise, you end up paying less than you owe. With a penalty abatement, the IRS will waive some or all of the penalties. However, getting the IRS to grant you an Offer in Compromise or Penalty Abatement isn’t easy. Obtaining expert advice from the professionals at Platinum Tax Defenders will help you get the best possible outcome.
At Risk of an IRS Audit? Call Platinum Tax Defenders
If you are worried that you may experience an audit, or recently went through an IRS audit, call Platinum Tax Defenders. We are currently offering free consultations to new clients. Our team of expert tax resolution specialists has years of experience helping taxpayers navigate daunting tax audits. Our team strives to help U.S. taxpayers deal with the IRS. We understand how stressful tax issues can be, and we are here to help. Call Platinum Tax Defenders today for a free consultation. For more information, visit www.platinumtaxdefenders.com or call 866-866-8053.