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Shah CPA Firm, PLLC & Shah Law Firm, PLLC
Shah CPA Firm, PLLC & Shah Law Firm, PLLC
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    • Home
    • The CPA Firm
      • Shah CPA Firm, PLLC
      • Preparing for 1st meeting
      • FAQ - choosing a preparer
      • FAQ - IRS audits
    • The Law Firm
      • Shah Law Firm, PLLC
      • FAQ - IRS audits
      • FAQ - tax attorney vs cpa
    • About Neeraj Shah
      • Neeraj Shah Bio
      • Local to Penfield
      • Penfield History
      • Penfield Photos
      • Penfield Events
      • Penfield Poems
      • Penfield Eclipse 2024
    • Contact Us
      • Contact Us - 585-388-8388
      • Testimonials
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  • Home
  • The CPA Firm
    • Shah CPA Firm, PLLC
    • Preparing for 1st meeting
    • FAQ - choosing a preparer
    • FAQ - IRS audits
  • The Law Firm
    • Shah Law Firm, PLLC
    • FAQ - IRS audits
    • FAQ - tax attorney vs cpa
  • About Neeraj Shah
    • Neeraj Shah Bio
    • Local to Penfield
    • Penfield History
    • Penfield Photos
    • Penfield Events
    • Penfield Poems
    • Penfield Eclipse 2024
  • Contact Us
    • Contact Us - 585-388-8388
    • Testimonials
    • Resources & Social Media
    • Your Business Card
    • - the fine print -

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Shah CPA Firm, PLLC

585-388-8388

FAQ - navigating IRS audits

People often think of "red flags" or "audits" as a four letter word. The algorithm used by the IRS to identify red flags that result in a form of audit is almost as obscure as the algorithm used for Google's search function. A "red flag" is an informal term - but a real concept - it occurs when the IRS feels something on your tax return doesn't jive with other taxpayers. An "audit" is just a process that is initiated by the IRS to clarify some of those line items. Unfortunately, if the IRS feels one line item on your tax return is "off," then it opens your entire return - and checks virtually everything on your return. The cost of a taxpayer to get through an audit can be substantial - legal fees, additional tax, penalties and interest. An audit, therefore, is something you should not take lightly.  


It is important to choose your audit representation wisely. Those willing to represent you in an audit come in several shapes and forms. They have different credentials and ethical standards. The work product varies just as much.  When you engage with someone who will represent you, think of the following:


  1. Centers of Expertise by Professional Type
  2. Check the credentials
  3. Top 5 "red flags"
  4. Types of IRS audits
  5. Neeraj's hat trick - CPA, attorney and MBA
  6. Strong Ethics

Centers of Expertise by Professional Type

Check the credentials

Check the Credentials of your Tax Professional. There are various types of tax professionals - and each have different levels of representation rights. Here is a summary of each. 


  • Attorneys - licensed by state courts. These are individuals earned a law degree AND passed a bar exam. Any information you share with an attorney is privileged (even with the IRS). Attorneys have unlimited representation rights before the IRS - audits, payment/collections and appeals.


  • Certified Public Accountants (CPAs) - licensed by state boards. These individuals completed a program of study in accounting AND passed the CPA exam. CPAs, like attorneys, have unlimited representation rights before the IRS - audits, payment/collections and appeals. However, CPAs only have limited confidentiality with respect to the information you share with them.


  • Enrolled Agents (EAs) - licensed by the IRS. These individuals passed an IRS Enrollment Exam. 


Beware of those national tax preparation chains. You know the ones - the seasonal tax preparers who have limited qualifications and experience - but give themselves fancy titles. Few, if any, are licensed CPAs and certainly none are both CPAs and attorneys (like yours truly)!


Beware of those individuals attempting to suggest that they are CPAs just because they worked for a CPA firm. Look at the credentials individuals place after their name - that's the best identifier of somebody's qualification.


Neeraj is certainly a qualified preparer - he has the hat trick - a CPA, an attorney and an MBA!

Top 5 "red flags"

Top 5 "red flags." It is important to understand what situations may be considered as a "red flag." A red flag could be a reason to mark your tax return for an audit. The list below is not meant to be all-inclusive, but here are some items you should be aware of.


  • Under reporting taxable income. The IRS has its way of estimating your taxable income.
  • Schedule C or Schedule E filers. Sole proprietors and landlords who have rental income prepare individual profit and loss statements to be included on the tax return. The IRS has a vested interest to make sure the top line (gross receipts or gross rents) are accurately reported AND deductions are not inflated.
  • Excessive deductions or credits. Presumably, the IRS compares deductions and credits on your tax return with others in similar tax brackets. 
  • Claiming a loss on a "hobby." Know the difference between a business and a hobby. A business is an activity with the intention of making a profit - a hobby is not! There are many factors that the IRS looks into to determine whether an activity is a business or hobby.
  • Virtual currency. This a relatively new type of investment property that the IRS is continuously trying to get its hands around. Unlike traditional investment assets, Form 1099s are not issued, which makes a higher need to audit virtual currency investors. 


Neeraj fully understands the above-mentioned issues. He takes pride in educating clients with the aim of accurately presenting income and deductions.

Types of IRS audits

FIRST OF ALL - Always remember, the IRS never initiates contact via phone or email. It generally sends letters to the taxpayer via USPS regular mail, and USPS certified mail. If you are unsure whether a communication is authentic, it is best to contact the IRS directly.


The most common types of IRS audits are:


  • Correspondence Audits. These are the most common form of audits examination (by mail). These letters often ask for additional information to substantiate a line item. 
  • Online Audits. The IRS started this program relatively recently which uses an online portal to communicate with an IRS examiner.
  • Office Audits. These letters "invite" you to an IRS office to discuss the matter.
  • Field Audits. The most invasive type of audits - because these audits occur on-location!


You may want representation to navigate the audit process and communicate with the IRS. Neeraj can assist in all of the above-mentioned audits.

Neeraj's hat trick - CPA, attorney and MBA

CPA - expertise when it comes to money

  • identify and solve financial problems
  • handle financial responsibilities


LAW - expertise when it comes to managing risk

  • recognize potential future risk
  • help guard against these risks


MBA - expertise when it comes to business strategy

  • think critically about business
  • understand business concepts

Strong ethics

Taxpayers are ultimately responsible for all the information on their income tax return. This is true regardless of who prepares the return. Having an ethical preparer will give you confidence on the content of your return. It is 100% better for all parties involved to place ethics as priority #1. Don't try to pull a fast one on the IRS.


Neeraj does not compromise one bit on ethics – always following rules to the “T” and expects clients to have the same mentality. No exceptions!

You are probably paying more for your tax preparation than our rates. We are here to support you, and we won't let you down. Don't opt for an inferior product; your refund depends on it!​ Don't wait until you get all your forms.


Call to schedule your appointment, (585) 388-8388. 

Office building for Shah CPA Firm, PLLC and Shah Law Firm, PLLC. Neeraj Shah is a CPA and attorney.

Neeraj Shah, Esq., MBA, CPA

2033 Penfield Rd 

Penfield, NY 14526


585-388-8388

About Neeraj

Copyright © 2023 Shah CPA Firm, PLLC and Shah Law Firm, PLLC - All Rights Reserved.

  • Home
  • Shah CPA Firm, PLLC
  • Shah Law Firm, PLLC
  • Neeraj Shah Bio
  • Contact Us - 585-388-8388
  • - the fine print -