IRS Audit Attorney

With more than a decade of legal, business, and tax experience, the team at Milikowsky Tax Law is on hand to help defend your business in an IRS audit.

There are few things more threatening to a business owner than a letter from the IRS.

An audit can be a time-consuming process. While you cannot avoid a tax audit, you can minimize your risk of an audit by avoiding potential flags on their tax return. The most frequent IRS audits are caused by inconsistencies or errors in your tax return that raise red flags in the eyes of the IRS.

When you work with Milikowsky Tax Law, you get more than an experienced tax litigation attorney. You get an experienced business and tax advisor who can work with you to reduce your chances of being audited, with our comprehensive tax return assessment system and years of business experience.

California’s Top IRS Audit Attorney

Our leading tax litigation attorney, John Milikowsky, has decades of experience representing countless businesses in legal tax matters. Mr. Milikowsky is dedicated to relentlessly defending his clients in everything from state and federal tax audits to criminal tax investigations. As a full-service tax law firm, we frequently work with business owners to empower owners to identify issues on their own tax returns. While there is no way to guarantee you will avoid a tax audit, we can teach you to significantly minimize your risk of an audit.

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Milikowsky Tax Law Defends Businesses in IRS Audits

When you’re faced with the formidable presence of a tax audit, don’t panic. Reach out to Milikowsky Tax Law, and we will protect your company to keep your business in business. Our skilled tax litigation attorneys will protect your rights every step of the way.

Whether you’ve just received a letter from the IRS, or you need help analyzing your legal rights and financial data reported on your tax returns, contact us today. The team at Milikowsky Tax Law is here to help.

San Diego Tax Attorney – Your Relentless Advocate in IRS Audits

Business owners may not be sure where to start if IRS audits their company. However, an IRS audit doesn’t have to overwhelm your life or impede your ability to conduct business. With the experienced team at Milikwosky Tax Law, you can navigate the process of an IRS audit secure in the knowledge that your tax attorneys are advocating for you every day.

There is little to no margin for error during an audit, a tight timetable, and potentially severe consequences for a poorly handled interaction with IRS. Unlike CPAs who do not have attorney-client privilege, attorneys are able to speak with your IRS officer on your behalf without risk of subpoena or summons of records discussed.  A qualified attorney can, review your documents with an expert eye, create the right strategy for you, represent you or your business, and provide valuable advice and guidance.

If you receive a letter from IRS confirming your business tax return has been selected for examination, review your return and identify the items that will likely be investigated so you can be prepared. Then, before communicating with IRS, reach out to an experienced IRS audit attorney. Having a game plan is critical. You want to be honest and prepared when speaking with your IRS revenue agent.

Anytime you file taxes, there is a chance that your tax return might be audited by the Internal Revenue Service (IRS). The agency conducts standard procedures to find any errors or discrepancies among taxpayers. The audit process is meticulous and, should you find yourself under the scrutiny of IRS, will require detailed information from you. 

In the article below, you’ll learn about the audit process and frequently asked questions surrounding IRS audits.

Why was I selected for an IRS Audit?

There are different reasons you may be flagged for IRS audits. Some are due to random checks; however, you have a low chance of being audited this way. Most taxpayers have less than a 0.6% chance of receiving a random audit check. 

IRS runs tax returns through its Discriminant Information Function (DIF) system to continually update their database and make sure they are tracking industry benchmarks for each industry and tax bracket. 

The DIF system also checks for incorrect tax filing information. Any discrepancies in tax forms, such as an imbalance of tax returns, a discrepancy between reported earnings and employer filings, or unreported cash transactions by one member of a transactional party, will trigger DIF to send your return to an IRS audit officer. 

People are more susceptible to an audit if they:

  • Earn less than $25,000 or more than $500,000
  • File incorrect or incomplete returns 
  • Have large numbers of cash transactions 
  • Claim a disproportionate number of deductions 
  • Are self-employed
  • Have a home-based business
  • Have a cash business 
  • Have foreign assets 

Sometimes you can be audited as a result of your business partners or investors going through an audit. 

How Will I Know If I am Selected for an Audit?

You will know if you are selected for an audit if you receive a verified letter in the mail from IRS. They do not call to notify you about your audit. 

What Do I Do If I’m selected for an Audit?

If you or your business are selected for an audit, make sure you read all of the information sent to you in your audit notification letter.  The letter and accompanying information request packet will notify you as to what entity is being audited (business or personal) what year(s) are under review and who your auditor is. Once you know what IRS needs, make sure you collect all of the records and supporting documentation requested (but nothing additional). You will need to submit records from banks, vendors, and businesses you have worked with, invoices and pay stubs, payroll records, and medical expenses among other information.

Should I Hire an IRS Tax Attorney to Help Me?

We suggest contacting a qualified tax attorney to help guide you through your audit, to ensure you are timely, responsive, compliant, and do not unintentionally increase the scope of your audit to other areas of your business or personal finances that would otherwise remain unscrutinized.. There is little to no margin for error during an audit, a tight timetable, and potentially severe consequences to a poorly handled interaction with IRS. Unlike CPAs who do not have attorney-client privilege, attorneys are able to speak with your IRS officer on your behalf without risk of subpoena or summons of records discussed.  A qualified attorney can, review your documents with an expert eye, create the right strategy for you, represent you or your business, and provide valuable advice and guidance. 

How long do I have to reply to an IRS audit?

You have 30 days to reply to the initial audit letter. Do not hesitate, and make sure you take the appropriate steps early on. IRS is not likely to provide extensions unless you have a good reason.  Your attorney can help by advocating for more time with the IRS agent.  A good attorney will know many of your local IRS auditors and have strong relationships built on well-structured prior cases and mutual respect. 

How Long Do Audits Take?

The time it takes to conduct an audit depends on the case. It fluctuates depending on:

  • The seriousness of the tax reporting error
  • When and whether the right information is provided to IRS
  • Communication between the person being audited and IRS officer

How Many Years of Tax Returns Can IRS audit?

IRS audits tax returns from the past three years; however, most are from the past two years. Only when IRS agents find discrepancies within the audit they are conducting do they dig for information older than three years. Most audits do not look for information past six years. Though in cases of criminal audits IRS can look back 9 years and longer. 

If you or someone you know received an audit letter from IRS, reach out to our expert team at Milikowsky Tax Law. We have over a decade of experience working with IRS and tax audits and are experts in defending business owners in the face of IRS or other government agency audits. 

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How to Prepare for the 2025 1099 Filing Deadline

Editor’s Note: This article has been updated to reflect 2025 filing requirements. While the original version referenced 2024, all information below now reflects the correct deadlines and rules for 2025 filings.

Filing 1099s can feel overwhelming, but understanding the process and key requirements can save you from costly penalties. Below, we break down three critical steps to ensure your forms are accurate and compliant.

Step 1: Verify Recipient Information

Before submitting your 1099 forms, ensure that all recipient details are accurate. This includes the recipient’s:

  • Name: Double-check the spelling of the individual’s or business’s name.
  • Social Security Number (SSN) or Employer Identification Number (EIN): Confirm the correct number is listed. Using incorrect information can trigger IRS notices and delay your filings.

If you’re filing a 1099 using an individual’s name and SSN instead of a business name and EIN, it’s crucial to confirm that the individual qualifies as an independent contractor under both federal and state laws. Misclassification can lead to audits, penalties, and reclassification of contractors as employees, so proceed carefully.

Step 2: Confirm Filing Requirements

Not every payment you make requires a 1099. Here’s a quick guide to determine whether you need to file.

  • Payments for Services vs. Goods

Generally, 1099s are required for payments over $600 made for services, not goods.
 If you’re paying for a combination of goods and services, you may still need to file if the service component meets the $600 threshold.

  • Payments by Credit Card

If you paid someone using a credit card, you’re typically not required to file a 1099. The recipient’s bank or merchant processor will issue a 1099-K for those payments, avoiding duplication.

Step 3: Understand Key Exemptions

Some situations exempt you from filing a 1099.

  • Payments Under $600: You don’t need to file if the total payments to a recipient are less than $600 for the year.
  • Corporate Entities: Most payments made to corporations are exempt, except for specific cases like attorney fees.
  • Credit Card Payments: As noted, these are reported separately by the recipient’s payment processor.

If you’re unsure whether your specific situation requires a 1099, consult a CPA or tax attorney to avoid errors.

Why Filing Correctly Matters

Filing inaccurate 1099s or failing to file altogether can result in significant penalties. Here’s what’s at stake.

IRS Penalties

  • The IRS can impose fines for incorrect or missing information on 1099s, starting at $50 per form.
  • Late filings can result in penalties that increase over time, with fines reaching up to $290 per form if corrections are not made promptly.

Audit Risks

  • Incorrectly classifying workers as independent contractors instead of employees can lead to IRS and state audits.
  • If reclassified, you may owe back taxes, payroll taxes, and additional penalties for up to three years of payments.

State Specific Penalties

  • States like California have strict rules around worker classification and reporting. Missteps can result in additional fines and penalties.

Filing 1099s: Practical Tips

To streamline your filing process and reduce errors, follow these best practices.

Organize Your Records

  • Review your bank statements, checks, and electronic payments.
  • Summarize all payments made to vendors and contractors, noting amounts over $600.

Gather W-9 Forms Early

  • Request W-9 forms from contractors before making payments. This ensures you have the correct name, SSN, or EIN on file when it’s time to file.

Use Filing Software

  • Consider using tax filing software or hiring a payroll service to handle your 1099 filings. These tools often include error-checking features.

File Electronically

  • If you’re filing 10 or more 1099 forms, the IRS requires electronic filing. Paper filings exceeding this threshold can result in additional penalties.

Seek Professional Guidance

Navigating 1099 requirements can be complex, especially if you’re dealing with multiple contractors or unusual payment scenarios. A tax attorney or CPA can help you ensure compliance, avoid penalties, and manage potential audits effectively.

Final Thoughts

The 2025 1099 filing deadline is just around the corner. Taking the time to verify recipient details, confirm filing requirements, and understand exemptions will save you headaches and financial penalties. 

For more expert advice, contact Milikowsky Tax Law and ensure your 1099s are filed correctly.