IRS Audit & Refund Notice Assistance for High Net Worth Individuals in Miami

The work begins before anyone writes a sentence back to the government. A family hands us an envelope, and the first job is reading that envelope for what it actually is. A CP2000 proposing extra tax on unreported broker proceeds is a computer match run against third party data, not an examination at all. A letter opening a field examination of a partnership return is a different animal with a different calendar and much higher stakes. Our opening move is almost always to pull account and wage transcripts using Form 4506-T or the online service at Get Transcript, because a transcript records what the agency believes it received. That is frequently not what the client believes was filed. We then read the letter against the plain language index the IRS publishes at Understanding Your IRS Notice or Letter, which tells us whether we are answering a machine or a revenue agent. Those two situations call for completely different responses, and mixing them up costs money.

Scope control is the second piece, and for wealthy taxpayers it is where most of the value sits. An examiner who asks about one charitable gift has one question in front of him. An examiner who receives a carton of unsorted paper has a hundred questions, because every page invites a follow up. We answer what was asked, in writing, with an index, and we do not volunteer adjacent years or adjacent entities. That discipline is the practical difference between a short correspondence exam and a fourteen month expansion into two partnerships and a family foundation. Honest IRS audit help for high net worth clients in Miami is mostly this unglamorous work of narrowing, sourcing, and dating documents rather than clever argument.

Representation comes third. We file Form 2848, Power of Attorney and Declaration of Representative, so the examiner’s questions land in our office instead of your kitchen. Clients who speak with examiners directly tend to answer the question that was asked and then keep talking. That extra sentence is what opens a second issue. With a power of attorney on file, every request arrives in writing, gets logged against a due date, and gets an answer built from the underlying books rather than from a five year old memory of a wire transfer.

The evidence decides the outcome, and the standards are published rather than secret. The agency’s recordkeeping guidance and Publication 463 spell out what a travel record or a meal log has to contain to survive review. When the books were kept properly all year, an examination is a retrieval exercise. When they were not, it turns into reconstruction under a deadline set by someone else. That is why we push families toward steady monthly bookkeeping and a coordinated approach to their individual tax returns, so the file that answers an examiner already exists on the day the letter arrives.

Here is a real shape of the work. A Coral Gables client came in with a notice proposing 214,000 dollars of additional tax plus an accuracy related penalty of 42,800 dollars. The cause was ordinary. His broker reported 1,900,000 dollars of gross proceeds on a Form 1099-B and left the cost basis column blank, so the matching program treated the whole amount as gain. His actual basis was 1,640,000 dollars. We supplied year end statements, a reconciled schedule tied to Form 8949, and a one page explanation of the reporting gap. The examination then addressed tax on the real 260,000 dollar gain rather than on the phantom figure. Every matter turns on its own records and no outcome is ever promised, but that case is typical in one respect. The fight was about documentation, not about law.

The mistake we correct most often is silence. A notice sits unopened on a counter in Brickell for five weeks because it looks frightening, and a thirty day response window quietly becomes a statutory notice of deficiency with a ninety day clock and far fewer choices. Open the envelope, write the deadline on your calendar, and call your CPA that same week. If you would rather have someone read it before you lose a month to worry, you can request a consultation and we will tell you plainly what the letter is and what it is not. Families who answer on time and on scope usually find the next filing season starts clean instead of under a shadow.

Selection is mostly mechanical, and understanding the machinery removes a good deal of the anxiety. Most individual returns run through a scoring model that compares each line against statistical norms for returns of similar size and shape. A return carrying wages and a standard deduction has almost nothing to score. A return carrying Schedule E rental and partnership income, a long Schedule D of capital transactions, and a substantial Schedule A has dozens of scoreable lines. More lines means more chances that one of them sits outside the expected range for that income band. Wealth by itself does not attract examiners. Complexity does, and wealth nearly always arrives wrapped in complexity.

The second driver has nothing to do with scoring. It is document matching. Every payer who sends you money also sends the IRS a copy of the paperwork. Dividends land on Form 1099-DIV, interest lands on Form 1099-INT, retirement distributions land on Form 1099-R, and every partnership you hold sends a Schedule K-1. A household with four brokerage accounts and six private investments can easily receive ninety separate information documents in a year. The computer does not read intent. It reads totals. One corrected 1099 that arrives in September, after an April filing, is enough to trigger a mismatch letter eighteen months later, even though the taxpayer did nothing wrong and even though the tax due may be zero once basis is applied.

Geography matters here in one specific way. Florida imposes no personal income tax, so a Miami family has no state return to defend and no state examiner reviewing a Form 1040. The Florida Department of Revenue concerns itself with sales tax and reemployment tax on businesses rather than with household income. All of the personal exposure sits in one place, which is federal. That concentration is exactly why IRS audit help for high net worth clients in Miami is a federal discipline rather than a state one, and why the federal file has to be built to carry the entire weight.

A worked example shows how ordinary this gets. A Key Biscayne couple held a private fund interest that issued an amended K-1 reporting an additional 96,000 dollars of ordinary income and a reallocation of 31,000 dollars of previously reported capital gain. Their return had been filed on the original K-1 in good faith. The matching program flagged the difference and proposed 38,400 dollars of tax with interest running from the original due date. Because the client kept the fund correspondence and we could tie the amended figures line by line to the partnership statement, the response was a document exchange rather than a dispute. The real cost was interest on a genuine underpayment of a few thousand dollars, not the headline number on the letter.

The common mistake is treating a selection notice as an accusation. It is not. Roughly speaking, most contacts of this kind are the machine asking a question it could not answer from the paper it holds. Panic produces two bad reactions, either paying a proposed figure that is wrong or writing an emotional letter that raises new issues. Neither helps. Steady bookkeeping through the year and honest tax strategy consulting before December do more to shorten an examination than anything anyone can say after the letter arrives.

The forward looking point is simple. You cannot make a complex return simple, and no return is beyond an audit no matter how carefully it is prepared. What you can do is build the return so that every unusual line already has its supporting file attached behind it. Families who work that way tend to treat the occasional notice as correspondence rather than as a crisis, and that difference compounds over a decade of filings.

Start by finding the notice number. It sits in the upper right corner of the first page, and it is the single most useful piece of information on the document. A CP2000 is a proposed change from document matching. A CP14 is a balance due statement. A Letter 525 is a general thirty day letter following an examination. The IRS keeps a plain language guide at Understanding Your IRS Notice or Letter that decodes each one. Read that entry before you form an opinion about what the agency wants, because the emotional reading of a tax notice is almost always worse than the actual reading.

Second, find the response deadline and treat it as a hard date. Most notices carry a thirty day window. Some carry ninety. That ninety day letter, the statutory notice of deficiency, is the one that matters most, because once it expires your options narrow sharply and the assessment becomes final. Write the date on a calendar the day you open the envelope. Nothing in this process punishes a client faster than a missed deadline, and nothing is easier to avoid.

Third, pull your transcripts before you answer anything. Using Get Transcript or Form 4506-T, we can see the account activity, the payments posted, and the wage and income documents the agency actually holds for that year. Roughly a quarter of the notices we review turn out to be answerable from the transcript alone, because a payment was applied to the wrong year or a return was posted twice. Arguing before reading the transcript is arguing blind.

What to avoid is a shorter list but a firmer one. Do not call the number on the notice and start explaining. Do not pay a proposed balance simply to make the letter go away, because paying can be read as agreement and it makes recovering the money a separate project. Do not send original documents. Do not assume the letter is genuine without checking, since fraudulent collection letters demanding payment by gift card or wire circulate constantly in South Florida. Real IRS audit help for high net worth clients in Miami begins with verification rather than reaction.

Suppose the notice is right and you do owe. A client in Coconut Grove received a proposal for 38,000 dollars because a 1099-R rollover was coded as a taxable distribution by the custodian. Had the coding been correct, the tax would have been zero. In a different case the same size number was real, arising from a 148,000 dollar consulting payment that never made it onto the return. In the second case the answer was to agree, pay through Direct Pay or set terms with Form 9465, and stop the interest from running. Knowing which case you are in requires reading the documents, not guessing from the dollar figure. The full menu of remittance choices sits at IRS Payments.

The mistake we see constantly among high earning households is delegation without oversight. The notice goes to the family office, the family office forwards it to a bookkeeper, the bookkeeper files it pending instruction, and eight weeks disappear. Set one rule instead. Any envelope from the IRS gets photographed and sent to your CPA the day it lands, before anyone decides whether it matters. Pair that with a clean set of individual tax returns and periodic tax strategy consulting and most letters resolve inside a single cycle.

Looking ahead, the households that handle notices well are the ones that decided in advance who opens the mail and who answers it. Make that decision now, while nothing is pending, and the next letter costs you an afternoon instead of a season.

You do not talk to the examiner. We do. That is the entire point of Form 2848, Power of Attorney and Declaration of Representative. Once it is on file, the revenue agent is required to direct requests to us. This is not about hiding anything. It is about keeping the record precise. An examiner asks a narrow question, the taxpayer answers it, and then, out of nervousness, adds a sentence about a different transaction in a different year. That sentence is now part of the file. A representative answers the question that was asked and stops, which is harder than it sounds when the subject is your own money.

Charitable substantiation is where large deductions most often fail, and the failures are procedural rather than moral. The client genuinely made the gift. The paperwork just did not meet the rule. Any single contribution of 250 dollars or more needs a contemporaneous written acknowledgment from the charity that states the amount and says whether anything of value was received in return. Contemporaneous has a specific meaning, which is that you hold the letter by the earlier of the filing date or the due date of the return. A receipt obtained during the examination, two years later, does not cure the defect. Noncash gifts above 5,000 dollars generally require a qualified appraisal and a completed Form 8283 signed by the appraiser and the donee organization. These deductions run through Schedule A, and the examiner reviewing them starts with the paperwork rather than the intent.

Business deductions follow a parallel logic. Publication 535 covers what an ordinary and necessary business expense is, while Publication 463 covers travel, meals, and vehicle records, which carry stricter substantiation than most other categories. For a vehicle, a credit card statement showing fuel purchases proves nothing. The record has to show the date, the mileage, the destination, and the business purpose. The agency’s recordkeeping page states the general standard, which is that you keep whatever supports an item until the period of limitations closes.

A worked example. A client deducted 250,000 dollars for a donation of contemporary art to a museum. The gift was real, the museum accepted it, and the acknowledgment letter was in the file. What was missing was a qualified appraisal, because the client relied on a gallery valuation letter from the year of purchase instead. The deduction was disallowed in full, which converted a 250,000 dollar deduction into roughly 92,500 dollars of additional federal tax at the top rate, before interest. A 4,000 dollar appraisal fee would have protected the entire position. In the same review, a 61,000 dollar deduction for business travel survived intact, because the client’s assistant had kept a contemporaneous calendar tying each trip to a named client meeting.

The mistake worth naming plainly is treating substantiation as a filing season chore. It is a January through December habit. Wealthy families generate deductible activity year round and then try to document it in eight weeks each spring, which never works. Sound bookkeeping that captures the purpose of a payment at the moment it happens, feeding into carefully prepared individual tax returns, is worth more in an examination than any argument made afterward. Good IRS audit help for high net worth clients in Miami is mostly the habit of writing down why, at the time you spend the money.

Going forward, pick the two or three deduction categories on your return that carry the largest dollars and build a standing file for each one now. When the question comes, and on a return of any size it eventually will, you will be handing over a folder rather than starting an archaeology project.

An amended return is a tool, not a reflex. Form 1040-X corrects a filed Form 1040 when something was wrong on it, such as a missed information document, an amended K-1 from a fund, or a deduction that was overstated. Generally you have three years from the filing date or two years from the date the tax was paid, whichever is later, to claim a refund. That deadline is real and it does not bend for good reasons. The timing question we get asked most is whether to amend while an examination is open. Usually the answer is no. Once a year is under examination, the corrections belong in the examination file, handed to the agent as part of the response, rather than filed separately where they can cross in the mail and confuse the record.

Amending on your own initiative is different, and it is often the right call. If you discover a real omission before anyone asks, correcting it voluntarily reduces exposure and shortens the conversation later. We check the transcript through Get Transcript first, because sometimes the item you are worried about was never reported to the agency at all and sometimes it was reported twice. Amend from the record, not from memory.

Now the residency point, which surprises many families who move here. Florida imposes no personal income tax, so there is no Florida residency examination of your household income and no Florida return to defend. The Florida Department of Revenue administers sales tax and reemployment tax on businesses, not a personal income tax. But a family that relocated from a high tax state may face a domicile inquiry from the state it left, and that proceeding is a completely different animal from a federal exam. A federal examination asks whether the numbers on the return are supported. A departing state’s residency inquiry asks a question about your life, which is where you actually live, and it is answered with day counts, homestead filings, license and voter records, where your dog sleeps, and where your dentist is. The evidence is biographical rather than financial, and the burden usually sits on the taxpayer.

A worked example. A family moved to Miami in March and treated the entire year as Florida time. Their former state reviewed the year and counted 197 days of physical presence inside its borders, mostly weekend returns to a home they had not yet sold. The exposure came to roughly 340,000 dollars of state tax on a 4,100,000 dollar liquidity event they had assumed was untaxed. Nothing about their federal return was wrong. The federal 1040 was accepted as filed. The problem was a state law question that no federal filing could answer. That is why IRS audit help for high net worth clients in Miami is only half the picture for a recently relocated household, and why we say plainly that domicile is a legal determination that belongs with your attorney. We are CPAs. We do not give legal advice, and we will not pretend otherwise.

The mistake here is the calendar nobody keeps. Families intend to track days and then reconstruct them in year three from credit card statements and photo metadata, which is a miserable way to spend a spring. Keep a contemporaneous log from the first day, back it with clean individual tax returns that reflect the move consistently, and use tax strategy consulting before the year of a large sale rather than after it.

The useful way to think about all of this is that the federal file and the domicile file are two separate cabinets, and both need building. Start the second one on the day you unpack, and the year you eventually sell something large will be far quieter than it would otherwise have been.