IRS audits for doctors and other medical professionals are on the rise. The stereotype of doctors is that they have a lot of income and keep poor records. The IRS is making hay with this stereotype when it is accurate.
I recently assisted one doctor with an audit. The revenue agent asked for verification of auto expense: the doctor had no mileage log, but he could verify driving between his office and various hospitals on a seven-day-a-week basis. His preparer had done something of a slapdash job. I got the IRS to agree to allow more auto expense than he had claimed on his return.
The IRS will also examine income closely for unreported income. The standard procedure: they add up all deposits into all accounts, and ask the taxpayer to verify that any of the deposits are not taxable. If there is a discrepancy between the income claimed on the return and the deposits into the accounts (minus nontaxable deposits), that difference is determined to be taxable. It’s hard to argue against the documentation.
Tax problems can sink a medical practice.
If this happens to your medical practice, call us. We are experts at resolving tax issues, and particularly enjoy helping doctors.