Keeping Proper Records

The Importance of Records

W-2 forms, bank statements, paid bills, and all other records supporting the items appearing on your tax return should be retained for at least 4 years (preferably six). The Internal Revenue Service or the State revenue service may request their reproduction in the event of an audit by them, of your return.

The major burden of proving the facts reported on your Income Tax Returns rests on you. We know the rules and follow them carefully, and if you can backup your deductions with the proper proof, then there is nothing to fear from an audit. The IRS reports that about 5% of all audits result in refunds! The vast majority of taxpayers overpay their taxes.

Some returns are selected at random for auditing and in case you are contacted, they are normally only requesting verification of some items on your return. Failure to respond is considered an admission of guilt and opens your return (and previous returns) to further investigation.

In any case, contact us before signing any waivers or agreements of any type. Even if a deficiency should be proposed by the examining revenue agent, you have extensive rights of appeal. Many areas of tax practice are controversial and a lot of transactions fall into these areas. You are not required to pay any more tax then the law demands, but it is often necessary to argue a little to establish what amount it is that the law may reasonably be construed to be requiring. As an experienced tax audit lawyer I, John Ellsworth, can provide stellar service in these matters.

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