When you are the target of an IRS audit, it is likely that you are going to have some strong feelings about it. Most of those feelings will not be good. Stress and worry are generally a big part of being audited, often because you really do not know what to expect, how to handle the questions you will be asked, and whether there are going to be further issues you will have to face because of problems with your audit.
Rather than continue to fret and be concerned, you can make things feel more comfortable by understanding the penalties, consequences, and stressors you may face, so you have a better idea of what to expect – like how the IRS can seize funds and if you can get them back.
The movement to ‘give back’ to taxpayers
Currently underway is a movement asking the IRS to return funds seized from taxpayers that the agency should have returned for one reason or antoher. It was the House Ways and Means Oversight Subcommittee brought about the action.
The subcommittee alleges that civil asset forfeiture has become a problem, and that many Americans have lost money and other assets to this practice. The goal is to return the money that rightfully belongs to these people, so they can regain their assets and use that money for whatever they find important.
How high is the risk?
The idea of the IRS potentially seizing your assets can sound incredibly scary, but it is an uncommon outcome of an audit. Generally, the IRS will want to look at your tax returns, and they will ask you questions about the amount of money you made, the deductions you took, and other factors. They want to figure out if you are told the truth on your return.
The more documentation you have to back up what you claimed on your tax return, the better off you will be. Supporting your return with evidence is a way you can show the IRS that you were telling the truth when you filed your return, and you may not even owe any additional tax or have to pay any penalties.
If you do have to pay more, make sure the IRS calculations are right. If they are not correct or you feel the extra amount is in error, you can hire an attorney to help you work with the IRS. That is often the best choice, because it provides you with strong legal representation and counsel that can make it easier for you to reach a fair resolution.
Having your assets seized can happen, but the IRS often uses the action as a last-resort if you fail to work with the IRS or fail to pay what you owe in a timely manner. Payment plans and other methods to help you pay your IRS debt are available.
Can I prevent asset seizure and forfeiture?
You can avoid being one of the people who has to fight the IRS to return forfeited assets by filing accurate tax returns, keeping your receipts and other paperwork, and choosing a good attorney to represent you if you should ever have a tax problem or the IRS chooses to audit you. The more prepared you are for the potential of an audit, the less stress you might have to experience – and the less money you might have to owe.