The digital footprint you leave on the internet, especially on social media, can be more revealing than you think. In an eye-opening video, John Milikowsky, the founder of Milikowsky Tax Law, discusses the extent of the IRS’s reach when conducting audits. The question posed is: Does the IRS look at your social media accounts during an audit?
- Public Information Scrutiny: The IRS has the authority to investigate public records and online presences, including social media, to gather data during an audit.
- Lifestyle Audits: Auditors may assess your lifestyle choices visible online, such as significant purchases or travel, to identify discrepancies with reported income.
- Preparing for Audits: Being proactive and preparing documentation ahead of IRS interviews is critical, particularly if lifestyle audits are a possibility.
When the IRS audits individuals or businesses, they bring more to the table than just your tax returns. They’re now incorporating modern methods by reviewing publicly available information – including your activities on social media and other online platforms.
Understanding IRS’s Investigative Reach:
While private accounts remain off-limits, anything in the public domain, such as Google search results or public social media posts, can be utilized by IRS auditors to gain insights into your financial status. This means that auditors may look at your company’s website or public social profiles for evidence of undisclosed income or assets.
The Concept of Lifestyle Audits:
The IRS’s approach isn’t new. They’ve long been conducting what is known as ‘lifestyle audits’. If there’s a mismatch between your reported income and your lifestyle as it appears online – say, luxury purchases or extravagant trips – the IRS may take a closer look.
Proactive Measures Before the Audit:
Before entering an audit, it’s important to reconcile your reported income with your public persona. If there are legitimate reasons for apparent discrepancies – like real estate losses offsetting income – having documentation on hand is essential. It’s advisable to consult with a tax attorney who can review your tax return, identify potential red flags, and strategize a response.
Expert Legal Representation:
Milikowsky Tax Law emphasizes the importance of professional guidance during audits. With extensive experience in over 600 audits, their expertise allows them to identify what the IRS may flag and ensure you’re prepared to justify any outliers in your financials, whether personal or business-related.
In today’s digital age, it’s wise to assume the IRS has as much access to your public information as anyone else. Proper preparation and understanding of the audit process, including the potential for lifestyle audits, can help mitigate risks. If you’re facing an audit and want expert advice, reach out to Milikowsky Tax Law for assistance.