When Is The Right Time To Need Audit Shield?

Here’s a little history lesson. The 1998 IRS reform and restricting act was submitted, imposing the IRS to focus more on taxpayer rights rather than collecting activities. As a result, about one in every 79 returns were audited for that year. The dramatic decrease continued and by 2003, the IRS data showed only one out of 150 individual taxpayers were audited. However, such positive trend did not continue. The IRS soon returned to impose stricter audits and by 2005, the number of audits was at its highest since 1998. In 2006, there were around 1.3 million individuals audited. To stay protected, people had to avail audit shield or tax protection insurance.

One of the biggest reasons why this happened is having taxpayers adjust their tax return figures purposely. There were more tax errors made and discovered by the IRS and they needed to step up collections once again. Many of the lawmakers who once requested that the IRS give taxpayers the benefit of the doubt started approving the new aggressive approach. Members of Congress hoped that enhanced enforcement efforts will help close the $350 billion tax gap. According to the 2001 figures, the amount represented the difference between what taxpayers should have paid and what they actually paid. So even if IRS had to make additional collections, Congress would have to consider raising the taxes.

However, a taxpayer doesn’t need to be discouraged when they file their credits or take legitimate deductions. They can resort to audit shield should they have discrepancies in their tax returns. Even if their tax returns can likely raise a red flag, it doesn’t mean that they will naturally be audited by IRS. If your tax returns are in question, you don’t actually end up owing the IRS. So long as what you enter in the tax returns are authorised and you have sufficient documentation, you’ll have nothing to worry about. It’s either you’ll have someone representing you so you can be fully defended against IRS audit.

Once you receive an IRS audit, audit shield can readily protect you. You just need to weigh things first if there is really a need for one.