Audits & Proposed Taxes

Audits

Both federal and state laws require taxpayers to keep records of their income and expenses and to file honest and accurate tax returns.  The IRS and the Department of Revenue generally have the legal authority to demand that a taxpayer provide proof of income and expenses and to examine this proof.  Going through an audit can be frustrating and time-consuming even if the auditor determines that the tax return at issue is 100% accurate as filed.  Hiring a professional to represent and to advise you during an audit can give you the piece of mind to carry on with your other affairs even when the government is examining your books and records.

Not all examinations are the same.  Some are more involved than others.  Regardless of the type of examination, the government’s ability to propose more income or tax or to propose disallowing expenses may be limited by time.  Even if the audit has been closed and additional taxes have been assessed, it may be possible to convince the government to reconsider the changes made.  It may be advisable to hire an experienced professional to represent you or your business during or after a tax audit.

Proposed Trust Fund Taxes

When a business has not paid all of its employment taxes to the IRS, the IRS can propose the Trust Fund Recovery Penalty against responsible parties.  When a business has not paid all of its employment taxes or sales and use taxes to the Department of Revenue, the Department of Revenue can propose a 100% Penalty against responsible parties.

Whether you may be considered to be a responsible party depends upon your involvement with the business.  If the IRS has proposed to assess the Trust Fund Recovery Penalty or if the Department of Revenue has proposed to assess the 100% Penalty against you, you will have a limited opportunity to protest. 

If the IRS has proposed the Trust Fund Recovery Penalty and/or if the Department of Revenue has proposed the 100% Penalty against you, contact GMD Tax Law today! Call us at 617.237.6347 or email Attorney Gregory Dzialo today at gdzialo@gmdtaxlaw.com.

Our taxpayer was involved in a business. Unbeknownst to him, the business had not paid all of its employment taxes to the IRS. After his death, the IRS proposed to assess the Trust Fund Recovery Penalty against him individually. If this was successful, the IRS would have claimed to a large portion of the funds in his estate. Attorney Gregory Dzialo was able to successfully argue that the taxpayer was not responsible for the trust fund portion of the business’ unpaid employment taxes. As a result, all of the funds in the taxpayer’s estate were passed on to his wife and children.