CASE STUDY 3

IRS Audit Defense & Proposed Assessment

Context

A married couple was selected for an IRS audit after claiming substantial Schedule A and Schedule C deductions. The IRS proposed a significant tax increase and accuracy-related penalties, citing insufficient documentation.

Challenge

The taxpayers faced:

● A substantial proposed tax assessment

● Disallowed business and itemized deductions

● Accuracy-related penalties

● The possibility of the audit expanding to additional tax years

Our Approach

Tax Matters:

● Reconstructed missing financial records

● Organized supporting documentation

● Prepared a detailed audit response

● Challenged unsupported IRS adjustments

● Negotiated directly with the IRS examiner

Outcome

The IRS accepted most of the supporting documentation, reducing the proposed assessment by more than 80%. All penalties were removed, and the audit concluded without expanding to additional tax years.