Tax Audit Lawyers in North Caldwell

A "tax audit" is a procedure in North Caldwell, New Jersey where the tax authorities investigate a taxpayer's (whether the taxpayer is a person or corporation) filings when it looks like there's some kind of discrepancy. However, many state and federal tax audits are the result of random selection, when the authorities don't necessarily think that a taxpayer has deliberately evaded their taxes.

The actual process involved in a tax audit in North Caldwell, New Jersey is normally fairly straightforward. If you hare chosen for an audit, you will receive a letter in the mail telling you as much. Before responding, it's essential for you to make sure that the letter is authentic, because there are scammers who send fake audit letters to innocent victims, in an attempt to extort money out of them. You should search the Internet for the name of the organization that the letter claims to represent, and call them using the contact information on their website, and confirm that you are really being audited.

Once you receive the letter, and confirm its authenticity, you will have to meet with an auditor at the time and place mentioned in the letter, and subsequent communications with the auditor. The auditor will tell you what documents and records you need to bring to the meeting. They will then ask you some questions to clear up whatever discrepancy they found in your tax return.

Reasons For a Tax Audit in North Caldwell, New Jersey

There are numerous different reasons why the federal government, or the tax authorities of New Jersey might decide that a tax audit is warranted in your case.

As considered earlier, tax audits can be conducted at random. Evidently, the government doesn't have the resources to audit every taxpayer under their jurisdiction. But, by conducting a considerable number of random audits each year, taxpayers are, in theory, discouraged from cheating on their taxes, because they know that they might be audited randomly. If you are chosen for a random audit, and have done everything right, you almost definately have nothing to worry about.

Nonetheless if the IRS or other tax agency suspects actual wrongdoing by a North Caldwell, New Jersey taxpayer, that's a different matter. There are numerous different reasons why a government might determine to audit a taxpayer. The most frequent one is suspicion that they have underreported their income. If a taxpayer buys a massive number of expensive luxury items, but reports little or no income on their tax returns, the government will definitely want to discover where the money to buy all those things came from, and why it hasn't been declared as taxable income.

Another frequent reason for tax audits in North Caldwell, New Jersey is when a taxpayer claims a large number of deductions. A deduction is just a legally-authorized subtraction from a person's taxable income. For example, charitable donations can be deducted from one's income in the full amount of the donation. Nonetheless, if a person claims a very large number of deductions, to the point that they claim little or no tax liability, the tax authorities are going to take a closer look.

How Can A North Caldwell, New Jersey Tax Lawyer Help?

If you experience an audit in North Caldwell, New Jersey, and believe that you have properly reported all of your income on your tax filings, it will probably go fine. And if there is anything wrong with your filings, it was likely the result of an honest mistake, and auditors are generally sensitive to this fact. In such cases, the penalty is normally light. It will probably be little more than a requirement that you pay back taxes and interest.

However, there are some tax audits where the underlying facts are much more intricate than a simple misunderstanding. In these cases, a good tax attorney in North Caldwell, New Jersey may be necessary to ensure that the process is as painless as it can possibly be.