IRS audits are stressful and unpleasant events that all people want to avoid. However, most people shred their records and breathe a sigh of relief when the three year statute of limitations on audits passes. However, many people don’t realize that there are a few things that leave you wide open for an audit for the rest of your life. The IRS is legally free to audit you forever if you make the following tax mistakes.
Forgetting to Sign
Your tax return is not a legally complete document until you have signed the forms along with signing an unaltered penalties of perjury. While these may sound like easy mistakes to avoid, it is surprisingly common for people filing their own taxes to miss these little details.
Failing to File a Form 5471
Offshore accounts, including some offshore investments, are subject to extra scrutiny. In fact, the IRS reserves the right to audit within six years of documents related to these being filed even in normal conditions.
The most common mistake that people with offshore investments make is failing to file a completed form 5471. If this is not filed, the IRS can audit at any time in the future. Penalties for this omission are usually $10,000 per unfiled form, and there are penalties for late or incomplete ones as well. These penalties apply even if the unfiled or incomplete form would have made no difference in the taxes due.
How to Avoid Unlimited Audits
How can you avoid making these tax mistakes? Seeing a tax professional is key. Gary M. Kaplan, CPA is licensed to provide guidance and tax assistance in Florida, New York, Maryland Utah, and Washington D.C. He offers free consultations as well as a full range of tax and accounting services. Whether you need help with business and personal accounting, filing taxes, starting a business, or planning for an estate, Gary M. Kaplan is here to assist with all of your accounting and tax needs. An experienced CPA can help you to avoid making common and innocent errors that leave you with a lifetime of liability and potential IRS audits.
