From $276,000 Tax Audit Exposure to an $18,000 Tax Appeal Hearings Final Assessment- Case Study At Karla Dennis And Associates, Inc.™

“If you think education is expensive, try ignorance.” – Derek Bok

Let me talk about one of the biggest mistakes that I’ve seen that can cost you thousands; if not tens or hundreds of thousands- even millions of dollars.

When people completely misunderstand the correlation between tax preparation; in relation to tax law and an Internal Revenue Service tax audit on your tax returns; you have squarely placed yourself in danger of that one audit that can take down everything you’ve worked hard for.  This is something that I continue to talk about and harp on, but it’s so key; is understanding the level of competency of the person preparing your tax return.  Having this awareness will fundamentally mitigate against the risk of tax trouble and a tax audit down the road.

A client of mine recently referred a new client to me who had multiple issues going on.  Not only was he short selling his property, but he was in the middle of a tax audit. It started off with 1 year.  Then the tax audit went to 4 years because the level of competency of the individual helping him wasn’t there to execute close the audit, contain the audit, execute tax law; and get in and out. Unfortunately, when that tax audit came to me, the taxpayer owed $276,000, and that was just the amount to the Internal Revenue Service.

He was very disheartened.  He had hired people who he thought knew how to prepare returns and handle tax representation with their clients in Internal Revenue Service audits. I must tell you, there’s a distinct difference.

Here’s why.

A lot of people can prepare tax returns, put data into the system and calculate numbers.  But, it takes an entirely different level of education for someone to look at your tax return, fully understand the magnitude of tax law surrounding the return, and handling issues that can potentially pop up during tax appeal hearings.  Tax audits can get intense really fast.  In this particular case, when I received the tax return, I looked at what was happening and I could tell, right off the bat, that the client was in tax trouble.

So, we took over the case, we wrapped the case up with the local auditor, and then we chose to take the case to a tax appeal hearing because we understand tax law.  We recently had this taxpayer’s appeals hearing, went in with $276,000 on the table that my client would’ve potentially owed back to IRS.  We came in; negotiated with the appeals hearing officer; and brought in case law– lots of tax law. At this level of tax representation, it’s not just about tax forms and tax preparation.  At this magnitude of potential loss to the taxpayer, handling this specific case was truly is about understanding and executing on tax law; and handling the tax appeal hearings process in court. We presented case law, and we walked out of that Internal Revenue Service tax appeals hearing with the client’s final assessment of him only owing $18,000.

We went from the client’s initial tax assessment of $276,000 to the final tax appeal hearings final assessment of $18,000!  That is a significant, significant impact to my taxpayer- proper tax representation is everything. There’s so many people out there who are in this situation telling me they have people helping them with these audits- and they do not know what they’re doing. It’s unfortunate, because a lot of people don’t understand the distinctions and classifications, in regards to tax professionals and tax preparation.

Contact us today so we can handle your tax resolution.

Karla Dennis

As seen in Forbes Magazine, Karla Dennis is an expert tax and business strategist. As an enrolled agent, Karla is licensed to represent taxpayers in all 50 states. She holds a Masters in Taxation and Business Development and is the author of two books, Tax Storm and Against the Odds.

Karla, CEO of consultancy firm Karla Dennis And Associates, Inc.™, has saved her clients thousands of dollars and has been featured in various media outlets such as Forbes, MSNBC, KTLA, Yahoo! Finance, and SmartMoney, marking her as the ultimate tax expert.

As of 2014, Karla became the new host on the “Mind Your Business” radio show, KTLK AM 1150, sharing her financial and business knowledge with the greater Orange County and Los Angeles areas. As a supporter of women’s rights and issues, Karla is part of the Women Network, an organization built to educate and mentor women. In addition, Karla is the radio host for Women Network Radio, a show that aims to uplift and empower women of all walks of life.