Has the The Massachusetts Department of Revenue (DOR) notified you that your Massachusetts personal income tax return will be audited? The DOR continues to increase the number of correspondence tax audits it conducts each year.
We are regularly contacted by taxpayers who have received an audit letter from a DOR auditor and are in need of professional representation. Once we are engaged by a taxpayer for audit representation we deal directly with the DOR auditor , thus relieving the taxpayer from any need to speak, meet or correspond with the auditor.
The audit letter typically indicates the year or years under examination, the information requested by the DOR auditor and the date by which it must be submitted. Many of the information and/or documentation requests we are currently seeing deal with itemized deductions taken on Schedule A or business expenses deducted on Schedule C for self-employed individuals .
Employee business expenses are given a lot of attention by DOR auditors as they historically produce audit adjustments that result in additional tax revenue for the State. We recently represented a taxpayer that had significant deductions for travel expenses. We helped him reconstruct a log that supported his deductions and obtained verification from his employer that he was required to travel as part of his employment. After presenting this information to the DOR auditor, the taxpayer’s travel expenses were allowed.
Self -employed individuals or members of single member LLCs are required to file Schedule C with their personal income tax return and report their business income and expenses. A DOR auditor may request that the income reported on Schedule C be reconciled to the taxpayers bank statements or require documentation for some or all business expenses claimed on Schedule C. Automobile expenses, rent, insurance, and commissions are some expenses that are frequently audited by the DOR. If the taxpayer does not have the documentation requested by the DOR auditor we will help in developing alternative documentation acceptable to the auditor.
Our knowledge of the tax laws and negotiation skills have allowed us to successfully represent taxpayers before the IRS and State taxing authorities for more than thirty years. If you have received an audit letter from the DOR or IRS, don’t panic, just pick up the phone and call the Certified Public Accountants at East Coast Tax Consulting Group for a free consultation.