How To Avoid A Tax Audit

As federal and state budget deficits balloon out of control, the IRS and other taxing authorities are working harder to chase every tax dollar. Your odds of getting audited or receiving other unwelcome correspondence are climbing every year!

Responding to simple written notices can be expensive and time‐consuming, and responding to an actual audit can be even more of a financial burden, potentially resulting in hefty penalties. Even if no penalty is imposed, audits are stressful and can take several years to resolve.

Read and apply the steps below to avoid an IRS audit nightmare:

  1. Allocate income and expenses wisely. Although audits are usually chosen at random, business owners have a higher risk of being audited. So don’t understate income or overstate deductions, but be reasonable with what you allocate to these categories. If the math doesn’t add up to you, then it definitely won’t add up to the IRS.
  1. Double-check all IRS documents. When you receive any IRS documents, like 1099’s or W2’s, make sure that they are accurately and appropriately included in your tax return. You may also be required to complete additional forms (i.e. Schedule C for sole proprietorships, Form 1065 for partnerships, Form 1120-S for S corporations or Form 1120 for C corporations). Don’t forget to include these to report your business income and expenses.
  1. Let Alfano & Company advise you year-round, not just during tax time. By regularly assisting you with your financials, we can prevent any behavior that could increase the probability of being audited. In case you do get audited, though, opt in for our Audit Correspondence Plan, which can be likened to annual audit insurance. For an additional fee, we will respond to written notices from federal or state taxing authorities related to this year’s tax return.

Tax Scams – How You Can Stay Protected

Have you ever fallen victim to a scam? If not, you’ve certainly heard of others who have. How can you protect yourself and your loved ones from falling prey to this pervasive trend?

Knowledge Protects

Stay up-to-date on the latest scams. This will put you ahead of the game in terms of preventative measures. To help you, the IRS website keeps the public updated with popular tricks scammers are using.

Some tax payers have experienced receiving emails from scammers posing as the “Taxpayer Advocacy Panel” claiming they have a refund. The scammers want you to click on their links to collect your personal information. If it seems just too good to be true, it probably is.

The IRS will only reach out to you via letter. No matter how skilled they sound or how much information they seem to know about you personally, this is not the IRS.

Remember, the IRS will NEVER:

  • Call to demand immediate payment using a specific payment method such as a prepaid debit card, gift card or wire transfer. Generally, the IRS will first mail you a bill if you owe any taxes.
  • Threaten to immediately bring in local police or other law-enforcement groups to have you arrested for not paying.
  • Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe.
  • Ask for credit or debit card numbers over the phone.

Educate yourself and share it with others. This is the best way to keep you and your loved ones financially secure.

Remember, if you are ever contacted by the IRS, proceed with caution. Read here to learn what to do if you receive a notice. Forward any suspicious information to Additionally, it’s always best to have a professional take a look at the notice to investigate its validity. Please contact us regarding any notices you receive. We’re here to help!

How to Prevent Tax Identity Theft

The Federal Trade Commission (FTC) has designated January 29 to February 2, 2018 as Tax Identity Theft Awareness Week .  Tax-related identity theft occurs when someone uses your Social Security number to file a return with your name in order to collect your refund without your knowledge. The theft most likely becomes apparent when you attempt to file your return.

According to a recent Identity Fraud Study released by Javelin Strategy & Research about $16 billion was stolen from 15.4 million Americans in 2016. In the past six years identity thieves have stolen over $107 billion.

Alfano & Company understands how scary and important your concerns are with tax-related identity theft.  Following these simple tips can help you protect your information and offer help if you fall victim to fraud.

What can you to do prevent identity theft?

  • Avoid phishing emails (do not offer important numbers such as your social security information)
  • Mark out important information such as Social Security numbers and bank account information in your emails
  • Don’t ignore any notices you may receive in the postal mail.
  • File your tax return early!

What to do if you’re already a fraud victim?

  • Submit IRS Form 14039, an Identity Theft Affidavit. This will flag your account should any questionable activity occur and alert the IRS.
  • Follow IRS procedures for reporting a fraudulent return.
  • Place a credit freeze on your report.
  • Submit Form 4506-F to request a copy of the fraudulent tax return. This could help you understand how your personal information was used.

Since identity theft issues are increasingly prevalent, it is imperative that you safeguard your financial and tax information!

If you would like assistance with tax-related identity theft issues or tax fraud concerns, our team at Alfano & Company is ready to assist you!   Contact our office here