CASE STUDY 3

IRS Audit Defense & Proposed Assessment

Context

A married couple was selected for an IRS audit after claiming significant business and itemized deductions. During the examination, the IRS questioned the supporting documentation and proposed a substantial increase in tax, along with accuracy-related penalties.

Challenge

The taxpayers faced a significant proposed assessment, disallowed deductions, additional penalties, and the possibility that the examination could expand into other tax years.

Our Approach

Tax Matters reconstructed missing financial records, organized supporting documentation, and prepared a detailed response to the audit. We challenged unsupported adjustments and worked directly with the IRS examiner to substantiate the deductions and resolve disputed issues.

Outcome

The IRS accepted most of the supporting documentation, reducing the proposed assessment by more than 80%. All accuracy-related penalties were removed, and the audit was closed without expanding into additional tax years.

More than 80% of the proposed assessment eliminated. Penalties removed. Audit closed.