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Tax Audits Attorney in San Antonio, Texas

A tax audit is something that not everyone will have to experience but many people live in dread of. But what is the Texas tax audit process actually like? And should you be nervous about it? Although you may feel anxious knowing you’ll be audited, you shouldn’t be scared, but you should reach out for help. Tax audit support services are available and can be extremely helpful to better understand the process, what you can do to prepare, and how to address any issues that come up along the way.  

For help handling tax audits in Texas, give me a call, Melissa L Ellis, PC. I work out of San Antonio, Texas, but can represent clients throughout the area, including Houston, Austin, Dallas, and McAllen.  

What Is a Tax Audit?  

A tax audit is a formal review of your (or your business/organization’s) financial documents undertaken by the federal or state revenue service. This is primarily done to verify that the information you’re reporting to government agencies is correct and the amounts you’re declaring for your account are accurate. These audits can focus on a particular section of your return or the entire thing. For example, you may be audited on the reporting of your:  

  • Income tax 

  • Sales tax 

  • Business profits or losses 

  • Rental income and expenses 

  • Itemized deductions 

  • Charitable donations  

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Preparing for a Tax Audit  

Anyone has the potential to be audited, but there are certain triggers for tax audits in Texas that you should be aware of: 

  • If you report a large amount of sales tax, business expenses, deductions, or charitable donations. 

  • If you were randomly selected out of your specific industry. 

  • If you were previously audited and it was discovered you owed taxes. 

  • If you report too many losses on a Schedule C form. 

  • If you didn’t report all of your income. 

  • If you made math errors on your return. 

Tax audit preparation can be time-consuming, but it is worth the effort you put into it. Proper preparation can make the entire process go by more quickly and with fewer issues. Together with your attorney, you’ll have to prepare and organize the following original items: 

  • tax returns for at least the previous three years 

  • mortgage statements 

  • investment documents 

  • pay stubs 

  • receipts 

  • business paperwork

Within your audit notice, you will also receive information about any other documents the IRS needs. Typically, you have 30 days to respond to your audit notice, and this timeline should not be ignored. Responding to a tax audit in a timely manner can help you speed up the process and ensure you’re not incurring any additional interest on amounts owed. Contacting a tax audit lawyer right away can help. 

The Tax Audit Process  

The IRS will notify you of an audit by mail. They currently do not notice individuals by email or phone. Once you receive this notice, you should immediately begin gathering documentation and necessary information requested by the IRS. After you respond to the audit notification, you will be scheduled for an interview which can either happen through the mail or in person as an on-site meeting: 

  • On-site audit: These audits can either occur at your home, your business, an IRS office, or your accountant’s office. These can be preferable in some cases, especially if most of your documents are in paper form and not digital. 

  • Remote audit: You may have the option of a remote audit where you can upload documents electronically. This may be a good option if you don’t have a good space for an in-person meeting or if you’ve done remote audits in the past with success.

In either case, opening lines of clear communication with the auditor will be key. Your attorney can communicate on your behalf as well as advise you on your direct communication with the auditor.  

Common Issues Leading to Audits in Texas  

Understanding Texas tax audits is similar to federal tax audits, and some of the same issues that could lead to a federal audit can also lead to a state audit. This can include: 

  • underreporting of income   

  • questionable deductions or credits   

  • discrepancies between federal and state returns   

  • unreported out-of-state income  

Appeals Process  

If, at the end of your audit, you disagree with the final decision of your auditor, you have the right to appeal this. And, like the beginning of the audit process, Texas tax audit appeals should also be done in a timely manner and ideally with solid legal representation. When you receive your final audit notification, it will contain information and deadlines about when appeals need to be submitted. 

When you contest your audit, you will first have to mail in a “Statement of Grounds” that clearly outlines the reason you’re contesting. Once this is received and reviewed, you may then be scheduled for an administrative hearing. It is strongly recommended that you do not attend this hearing without legal representation

If you live in or around the San Antonio, Texas, area and are interested in scheduling a Texas tax audit consultation, reach out to me today at Melissa L Ellis, PC.