Income tax return examination or audit can occur for several reasons-high deduction amounts, significant income tax savings due to method utilized, trade or business activities or "luck of the draw" routine review.
Our clients who have undergone examination or audit of their income tax returns find the process to be time consuming, aggravating, and expensive. Sometimes the cost of the examination or audit, even if it results in no change of the amount of tax due, can far exceed the preparation of the original tax return.
To soften the aggravation and particularly the expense of a possible examination or audit of your income tax returns, we are offering a special arrangement to those clients for whom we prepare income tax returns. We will represent you in the event of an income tax examination or audit, including any and all correspondence/inquiries from the federal or state agencies, including the Social Security Administration.
We will provide such representation and services on your personal return for 25% of the annual tax preparation fee, with a minimum floor of $75, for each year of coverage. Upon receipt of this retainer, you will incur no further costs with regard to an examination of a covered year.
In the event of an examination, we will represent you before the examining agent. The fee will cover all costs associated with both the federal and state inquiries up to but not including appeals or going to court.
However, there is no assurance that your returns will be examined by federal or state taxing authorities. In the event your returns are not examined, your retainer payment would be tax deductible, although no actual work would be performed for you. If you are examined or audited, we believe that the costs savings afforded you by a fixed fee retainer arrangement would be dramatic.
The retainer will include out of pocket costs limited to local travel and photocopying. Your responsibility will be to promptly notify us of any federal or state correspondence received and to secure all necessary information and documents relative to a pending examination.
Income tax returns are subject to a (3) year statute of limitations, which generally starts upon the due date for filing returns. Our services would cover you throughout this period.
In the event that you do not wish to engage us on a retainer basis, we will be pleased to represent you at any time in the future at my regular per-diem rates plus out of pocket costs.
This fee retainer arrangement is being made available to you for your 2012 income tax returns. All prior invoices with respect to the 2011 tax year must be paid prior to acceptance of this engagement.
Taxpayers who insist on using tax methodology that differs from our recommendations, and clients with ongoing audits, will not be eligible for the system.
If you have any questions or need additional information regarding this matter, please feel free to contact our office.