Most people dread IRS audits even when they are not guilty of a tax offense. After all, the IRS would rarely audit you if there is no suspicion of foul play when filing taxes. For those being audited by the IRS, it is prudent to get a tax controversy attorney or a qualified CPA. Before this, however, it is also crucial for you to understand the different types of audits and the reasons behind them. You may or may not have come across those three statements (eggshell audit, criminal investigation, and criminal prosecution) as a taxpayer. Either way the purpose of this article is enlighten you further on their differences as well as their correlation to each other.
So, What Is An Eggshell Audit?
An eggshell audit is a civil examination conducted by the IRS in situations where the taxpayer’s returns contain information that show sufficient indications of fraud. These issues include; an understatement on the record information pertaining to a taxpayer’s income, or an overstatement of the taxpayer’s credits or deductions which he or she was otherwise not entitled to. Both of these situations, though unique to each other, all conclude to a tax liability recorded by the taxpayer that is less than what is actually owed to the IRS. This would be against the fundamental requirement by the IRS to file accurate and correct returns.
The function of an eggshell audit is to determine whether there are any such issues which may be deduced to be either negligence or a criminal intent to evade taxes. If the eggshell auditors of the IRS therefore determine the former, then the tax payer will be required to incur a 20% negligence penalty. If the latter is, however, determined the eggshell examination will be considered to have criminal issues which will therefore lead to the following part of this article. Also, representation during an eggshell audit is restricted to tax controversy attorneys and CPAs within the Kovel agreement still with the aid of controversy.
Criminal Investigation
A criminal investigation is a process that entails the collection and gathering of evidence pertaining to a particular crime. In the event that an eggshell audit determines that the taxpayer willfully recorded false records of their tax liability, the issue becomes a criminal case. A criminal investigation is then launched to determine the possibility of a crime. A criminal investigator assigned to your case will seek clues and evidence to prove whether the taxpayer intentionally recorded false tax liabilities. If the criminal investigator finds criminal intent with the aid of substantial evidence, the arrest of the perpetrator ensues followed by court proceedings.
Criminal Prosecution
If the criminal investigator establishes criminal intent on a taxpayer’s false tax liability records, the accused taxpayer will be arrested and taken to trial. In this event, a criminal prosecution comes into play. The purpose of a criminal prosecution is to establish if the accused is guilty or not. How does this pan out eventually? The accused will be set free if found to be innocent or might face the relevant consequences of their crime if found guilty. In this case, guilty tax violators may get a 3 to 5 year jail sentence or a 75% fraud penalty.
Have a question about an audit? Contact Venar Ayar.
Kat Jennings, TaxConnections, CEO and Founder and Advisory Team provides three areas of services: 1) Internationally recognized, retained executive search services for multinational corporations, public accounting firms, and law firms; 2) Introductions of sellers to buyers of small and medium size accounting firms; and 3) Provide brand building and education services that support and prepare accounting firm owners to buy/sell an accounting practice. We focus on educating the journey to sell a practice and how to increase firm revenue prior to any sale. Our program ensures you start years prior to a sale by learning what is expected of you during the selling process, and introducing firm Partners to cross selling opportunities that are easy to implement and reduce your workload at the same time. We introduce you to value added connections to smartly grow revenue in your accounting practice.
Kat Jennings has been retained by organizations worldwide to locate tax professionals with highly specialized tax knowledge and expertise. She has a thorough understanding of the tax business community, with a proven record of stellar performances matching professionals with organizations. Bringing two parties together to work successfully is the art of understanding personalities, cultural fit, expectations by both parties, flexible or inflexible work environments, understanding what drives and motivates each party, and revolves around the personality and ethics of each executive team.
Kat is a widely recognized expert in high level, tax executive search, as well as connecting buyers and sellers of accounting firms. TaxConnections provides and educates small to medium size accounting firms owners and Partners how to prepare and sell their firms so they can build a succession plan for their retirement. With larger firms seeking to acquire smaller accounting practices, there is a real need to help firm owners prepare to be acquired. Most firm owners are unaware they are not ready to sell when they decide to retire. TaxConnections educates firm owners’ what they need to do years in advance of selling an accounting firm practice.
Senior tax executives expect the utmost privacy when being introduced to multinational organizations about a new tax opportunity under consideration. Having said that, companies searching for a new head of tax expecting tax executive candidates to submit their resume through a resume portal, will never see a full slate of outstanding tax executives available due to a candidates’ desire for greater privacy. This is why privacy focused Uber Tax Recruiters consistently outperform in-house recruiters on tax executive searches.
We offer our clients a Performance Retainer Agreement arrangement so their HR department can still recruit and compete with the tax candidates we present on Head of Tax searches. The client pays us a partial fee upfront, and if they find a candidate they deem better than we introduce to them, we forfeit the final fee. Most of the time, they love and prefer our private introductions to tax executive candidates better than what they source through their own resume portals.
When we represent selling/buying small to medium-sized firms, firm owners/partners also demand greater privacy when considering the sale of their practice. TaxConnections provides a safe place to discuss their business needs, elevate their practices’ online reputation, and increase revenue through new streams of business development by outsourcing work and partnering with other firms. Over three decades, we have worked tirelessly to build relationships between firm owners most organizations rarely have access to in the world of tax. There are numerous possibilities you may never have considered previously to bolster the value of your practice and service offerings.
As a globally recognized consultant to multinational organizations, accounting firms, and law firms searching for tax expertise, Kat has been retained by public accounting firms, law firms, and corporations worldwide including Apple Computer, AC Neilson, Accenture, Agilent Technologies, Allergan, Alza, American Express, American Media, Aon, Baker & McKenzie, Barclays Bank, Bechtel, Cargill, Carl Zieuss Vision, Century Aluminum, Chevron, Clorox, Citigroup, Commercials Metals, Constellation Energy, Countrywide, Del Monte, Deloitte Touche, DFS, DLA Piper, E&J Gallo Winery, Electronic Arts, Ernst &Young, Fox Entertainment, Fremont Investments, General Electric,General Motors, Herbalife, Hewlett Packard, Hyatt, Intel, Jones Lang LaSalle, Kimco Realty, KLA Tencor, Koch Industries, KPMG, Levi Strauss, Liberty Mutual, LKQ, Loews, Logitech, Lucas Film, Maersk, McKesson, Nalco, Newell Rubbermaid, Nissan, Oracle, Orbitax, Pacific Gas & Electric, PwC, QAD, SAIC, SanDisk, Sanmina, Sempra Energy, SONY, Synopsys, Ticketmaster, Trimble Navigation, Toyota, Univar, Wal-Mart, Wells Fargo, Vertex, Yahoo, Xilinx, and many more not listed here.
Contact Kat at 858,999.0053 Office/858.232.4415 Cell or kat@taxconnections.com to request a private consultation regarding the sale of your practice, adding top talent to your organization, or merging your practice with another firm owner with a book of business. The possibilities are endless; if you have a dream of a new vision for your professional life; we will scout opportunities throughout the market to make it happen.
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