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Are There Specific Things that can Trigger an Audit?
Once a taxpayer files tax return, FBR checks that return for form and mathematical accuracy. The Collection Division then classifies it according to a system and passes it on to the Examination Division where initial review is being performed to determine whether there needs an office audit, field audit or no audit at all. A computer program called the Discriminant Inventory Function System (DIF) gives each individual tax return a numeric score after it has been processed.
A high score may result in a return being selected for an audit. A return may also be chosen for an examination if information in third-party documentation does not match with the information given in the return. A return can also be selected for examination based on information from other sources (individuals, public records and newspapers) about possible noncompliance with tax laws or inaccuracies in the return.
There are a number of reasons why a return may be selected for closer examination or an audit.
Some may be simple mistakes such as:
⦠Missing information such as Bank Transactions, Investments, NTN number, address or daytime telephone number
⦠Incorrect mathematical calculation
⦠Writing down the wrong information
Because even an honest mistake or simple error may trigger an audit, it is important to be extremely careful when completing your return.
There are also a number of situations that may trigger closer scrutiny from the FBR including:
⦠Claiming exemptions in abundance
⦠Taking the standard deduction when somebody else claimed you as a dependent
⦠Not acknowledging all your income
⦠Underreporting tip income
⦠Owing little or no tax because of excess deductions and credits that subjected you to the alternative minimum tax (AMT), but you did not calculate or pay the AMT
⦠Claiming home office deduction
⦠Claiming substantial investment losses
⦠Claiming hefty medical expenses deduction
⦠Claiming major portion as business expenses
⦠Claiming large charitable contributions
⦠Filing as a head of household and failing to properly list your dependents or listing someone as a dependent who does not qualify
These are all situations in which FBR may want to take a closer look to ensure that the taxpayer has proper documentation to support all the information in the tax return and that the taxpayer is paying proper amount of tax.
DISCLAIMER:Â This site and any information contained herein are intended for informational purposes only and should not be construed as legal advice. Seek competent counsel for advice on any legal matter.
Need a Lawyer? Let Us Help You
One of the most common types of Tax-related lawsuits alleging business and entity rights violations results from improper conduct by law enforcement. Victims can bring claims based on excessive force or misconduct, illegal searches and seizures, false litigation or arrests, malicious prosecutions, unjustified Tax calculation, and other abuses of power.
Taxpayers have the right to know what they need to do to comply with the tax laws. They are entitled to clear explanations of the laws and FBR procedures in all tax forms, instructions, publications, notices, and correspondence. They have the right to be informed of FBR decisions about their tax accounts and to receive clear explanations of the outcomes.
They can help taxpayers secure offers in compromise settlements, FBR payment plans, hardship status, penalty abatement, innocent spouse relief, the release of liens or levies, prepare and file un-filed years of taxes, and many other tax settlements. Resolution of tax problems can be extremely complicated.
Taxpayers have the right to receive prompt, courteous, and professional assistance in their dealings with the FBR, to be spoken to in a way they can easily understand, to receive clear and easily understandable communications from the FBR, and to speak to a supervisor about inadequate service.
As a prospective client, you are expected to do your research before hiring a tax attorney to represent you.
ask the following details first:
- How do you charge or bill for services?
- Area of expertise
- Experience
- Retainer costs
- Incidentals like copying or postage
- Administrative support costs
To start a lawsuit without a lawyer, you may need to file a verified complaint, along with the specified filing fee. It is the same first step that a lawyer may take in commencing a lawsuit. This step is immediately followed by the filing of a civil summons form. so technically speaking you can sue without a lawyer, but in most cases, and depending on the type of case, it may be more work than you anticipated. In some situations, you must hire a lawyer to represent you in court. However, in most other situations, you can and should be represented by a lawyer.
Generally, the attorney-client privilege applies when: an actual or potential client communicates with a lawyer regarding legal advice. the lawyer is acting in a professional capacity (rather than, for example, as a friend), and. the client intended the communications to be private and acted accordingly. Attorney-client privilege refers to a legal privilege that works to keep confidential communications between an attorney and his or her client secret. The privilege is asserted in the face of a legal demand for the communications, such as a discovery request or a demand that the lawyer testifies under oath.