Tax Audits & Litigation

An IRS audit can be tremendously overbearing, drawn out and arduous experience for a taxpayer. Audits are an all-encompassing look into one’s life. IRS auditors have been known to overload taxpayers with questions that will elicit specific information that helps to strengthen the case against the taxpayer. Retaining an experienced attorney can help alleviate much of the contact between the taxpayer and the IRS. For instance, the taxpayer does not need to attend audit appointments because the attorney can be present for them. This method reduces the risk of the taxpayer being coerced to respond to questions they are not ready to answer.

Boyle Frost has a team of certified public accountants and forensic accountants ready to reconstruct income and expenses in a logical format, prepare back tax returns, and assist with helping clients comply with the IRS’s Voluntary Disclosure Program and FBAR reporting requirements. We have successfully completed audits for clients with limited records, or no records and receipts at all. Boyle Frost represents clients throughout the Washington, D.C. metropolitan area in both civil and criminal tax matters with the IRS and state taxing authorities.

The IRS uses several different methods to determine which federal income tax returns will be subject to an audit:

  • Computer scoring – Some returns are assigned a “score” that are determined by computer programs. The Discriminant Function System (“DIF”) score rates the potential for change, based upon the IRS’s experience with similar returns. The Unreported Income DIF (“UDIF”) creates a score for returns based upon the potential for unreported income. Many of the highest scoring returns are screened and selected for an audit. IRS personnel also identify items on the return that are most likely to have the potential for adjustment.
  • Information Matching – Returns are selected because taxpayer forms, such as Form W-2 or Form 1099, do not match the reported income on the tax return.
  • Participants in abusive tax avoidance transactions or foreign accounts — some returns are selected based on information obtained by the IRS through efforts to identify promoters and participants of abusive tax avoidance transactions.
  • Related examinations — returns may be selected for audit when they involve issues or transactions with other taxpayers, such as business partners or investors, whose returns were selected for audit.

Area offices may identify returns for auditing in connection with local projects such as local compliance initiatives, return preparer projects or specific market segments. It is also not out of the ordinary for audits to be triggered by information received from informants.