IRS Audits and Your Plan of Attack

As you grow your business and make more money, your chances of an IRS audit increase. For example, on an individual tax return, here are your chances of audit:

  • One in 38 with $200,000 or more in income
  • One in 10 with over $1 million in income
  • One in three with over $10 million in income

So, what do you do if the IRS sends you an audit notice? First, you call us.

What will we do? This depends on whom you will face in the audit: a tax auditor or a revenue agent.

If the IRS wants you to come to its office, you likely will meet with a tax auditor. If you spend just a little time with us, you may be able to handle this by yourself, because tax auditors are not tax experts. Or if you simply don’t want to talk to the IRS, we can represent you with or without your presence.

On the other hand, if the IRS wants to come to your office, expect a revenue agent. In this type of examination, you generally want us with you. We speak the same technical language as the revenue agent and this helps ensure that you don’t lose your rightful deductions.

Have questions? Give us a call at (610) 863-8347 today for a free consultation!

Stay tuned for more tax tips from Corvino and Verwys

Buy Your Employees Flowers

Buy Your Employees (and Yourself) Flowers and Fruit, and Deduct the Cost

Under the de minimis fringe benefit rules, your business deducts the cost of giving you or your employees flowers, fruit, books, and similar property under special circumstances. The recipients—you or your employees—receive these fringe benefits tax-free.

You can’t do this too often or spend too much money, but it’s easy to see that this is a great benefit, especially when you give to yourself.

For your business to make this fringe benefit tax-free, it must meet two requirements—value and frequency. Unfortunately, the IRS has not been very helpful in defining either criterion. With some research, we arrived at $70 as the maximum value for the flowers, fruit, books, and similar property.

How often is too often? The IRS doesn’t say, but it adds some common sense to the regulation with this guidance as to when this fringe benefit is appropriate: “Examples of de minimis fringe benefits are … flowers, fruit, books, or similar property provided to employees under special circumstances (e.g., on account of illness, outstanding performance, or family crisis).”

Just don’t use gift cards or certificates. The IRS considers the coupon or gift card taxable to the recipient no matter how small the amount, even if that small amount is used solely to buy the flowers or fruit.

How much is too much? Give us a call at (610)863-8347  for a free consultation. 

Stay tuned for more tax tips from Corvino and Verwys

Be Sure It's Really the IRS

Constantly changing scams require your attention 

Believe it or not, pretending to be an IRS agent is common among scam artists, according to the Better Business Bureau. Scam artists impersonate the IRS to either intimidate people into making payments over the phone, or in phishing attempts to trick people into sharing personal information via email.

You can defend yourself against these scammers by knowing these simple rules:

Rule 1: Expect a letter first

In almost every case, the IRS will send you a letter via standard mail if they need to get in touch with you. This will alert you to expect future communication from the agency and instruct you on the best ways to get in touch with them.

Rule 2: Never over email

The IRS will never initiate contact with you using email. A common scammer trick is to send emails to taxpayers using accounts and graphics that imitate the agency's. They may threaten imprisonment or fines if you don't pay up, or promise an extra refund if you send money to "prepay" your taxes. Often the emails contain links to an official-looking but fake website to collect payments. Clicking on them may also trigger the installation of viruses on your computer.

What to do: Don't respond to any email communications that look like they’re from the IRS. Don't click on any links. Delete the email or forward it to phishing@irs.gov to help catch the scammers.


Rule 3: Proper phone call etiquette

After notification via the USPS, the real IRS may call you to discuss options to handle delinquent taxes or an audit. A real IRS agent or a debt collector won't demand immediate payment without giving you an opportunity to question or appeal the bill, nor will they threaten lawsuits, arrest or deportation. Their tone should not be hostile or insulting. Finally, if they ask for payment, they should be asking you to make it out only to the United States Treasury.

What to do: If you get a call from the IRS or an IRS debt collector, politely ask for the employee's name, badge number and phone number. They shouldn't hesitate to provide this information. You should then end the call and dial the IRS at 1-800-366-4484 to confirm the person's identity.

Rule 4: Check in-person visits

Ask the person for their credentials. Every IRS agent should be able to produce two forms of credentials: a pocket commission card and a personal identity verification card issued by the Department of Homeland Security, also called an HSPD-12.

What to do: Never provide sensitive information nor confirm information they may have without first independently verifying they are legitimate representatives of the IRS. If you have concerns you can call the IRS at 1-800-366-4484 to confirm the person's identity.

You do not need to navigate this problem on your own. Call immediately for assistance. It is good to have a knowledgeable expert on your side.

To be sure it's really the IRS, give us a call at (610)863-8347  for a free consultation.

Stay tuned for more tax tips from Corvino and Verwys.