I cut some big corners on my tax returns and have been notified by the IRS that my return is being audited. What’s next?
You really need professional help here. As a general rule, corners that are over 25% of the return filed are deemed fraudulent. Maybe you can explain it away, but if it’s 25% or more, it’s going to get a determination of being fraudulently understated. Here’s an example:
You file a return that says your income was $100. The result of the audit finds that your income was $200. This is a 100% increase.
Because your income increased by 100%, there is a very real chance that your initial filing may be determined to be fraudulent. This is a VERY BIG DEAL in taxland! You can be penalized anything from 100% of the taxes owed (in other words, now you owe TWICE the tax) all the way up to a long-term vacation in Club Fed.