Tax Audit in Hoover, Alabama
A "tax audit" in Alabama is the process by which the proper tax authorities (either the IRS, at the federal level, or its state equivalent) investigate a tax filing in more detail than they do for ordinary filings, typically because there appears to be a discrepancy, or some other suspicious item, in somebody's tax returns. However, the IRS (and state tax authorities) sometimes do rounds of random audits, where they audit taxpayers at random, without necessarily suspecting them of any wrongdoing.
The procedure of being audited in Hoover, Alabama is typically pretty simple. If and when the tax authorities decide to audit you, they'll send you a letter in the mail detailing what's about to happen. If you receive such a letter, it's extremely important that you make sure it's authentic. Sometimes, scam artists will send fake audit notices to people, claiming that they owe the government money. They will then collect their "taxes" and disappear. You should do an internet search for the name of the tax authority that the letter claims to represent, and call them to verify that you are being audited.
After confirming that the audit you're facing is truly legitimate, there are a few things you can do to prepare. First, you should assemble all of the proper documents you have in your possession. This should include your tax return, W-2 forms, and records of any expenses that you claim as deductions. You should bring these documents, and any others that the auditor requests, to the meeting. At the meeting, the auditor will ask you a list of questions, which you should answer honestly and to the best of your knowledge.
Reasons For a Tax Audit in Hoover, Alabama
Tax Audits in Alabama can occur for a wide variety of different reasons.
As discussed earlier, an audit might occur due to a taxpayer being randomly selected. If this happens to you, and you have been forthright on your tax returns, it's unlikely that you'll have much to worry about.
On the other hand, there are also particular reasons why the tax authorities in Hoover, Alabama might want to conduct a tax audit. The most prevalent reason for a tax audit is suspicion that a taxpayer has not reported all of the income they earned in a given year. This suspicion often arises when a taxpayer buys a considerable number of expensive luxury items, but only claims a small amount of income on their tax return. Obviously, the tax man will be quite interested in learning where someone who is claiming a minimum-wage level income on their taxes got the money to buy a sports car.
Likewise, trying to deduct a large percentage of your income is likely to raise suspicions. A tax deduction is a way to reduce one's tax liability by making some of one's income non-taxable. Some customary sources of tax deductions in Hoover, Alabama are business expenses and charitable donations. Some people, however, try to include false deductions in their tax returns (trying to deduct charitable donations they never truly gave, for example). A massive number of deductions will be highly suspicious to the tax authorities, and they will want to see evidence to support every deduction you claim, if you're audited.
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How Can A Hoover, Alabama Tax Lawyer Help?
If you are audited in Hoover, Alabama, and believe that you have done everything right in collecting and filing your tax return, you probably don't have much to worry about. If there is anything wrong with your tax return, it was probably the result of an honest mistake, which will result in light penalties - typicallyy just an order to pay any back taxes you owe, plus interest.
But, there are some tax audits that are far more convoluted and serious than a tax return having a few more deductions than usual. If this is the situation you're in, you should contact a Hoover, Alabama tax attorney as soon as possible, to help make sure that your tax audit goes smoothly.