With the tax season right around the corner, there are a few areas that the Internal Revenue Service tends to focus on in regards to auditing individuals and small business owners. If you are aware of these, the upcoming tax season could be a breeze.

There are still people out in the world that believe that they don't owe any taxes and this is rare. If you don't pay your taxes, the IRS could hand out a variety of penalties. These penalties add up quickly and can put you into tax debt.

Other areas that can get you into trouble with the IRS include:

  • Not keeping detailed records with supporting documentation, especially travel and entertainment expenses.
  • Understanding what the IRS counts as income. Payments due to a physical injury or illness are not subject to tax, but other payments could be.
  • If you are involved in a settlement, make sure any payments that you receive clearly state the purpose and if it counts as taxable income.
  • Preparing your own taxes is fine, but have a tax preparer review your documents for accuracy. If you find yourself being audited, it helps to have a tax professional as your advocate to explain your position and provide the necessary documentation.
  • Work with a tax attorney if you find yourself in the situation of having a lien filed against you.
  • If your spouse or business partner is not filing the appropriate tax information, you can claim joint and several liability, or innocent spouse claim. The IRS is modifying its policies in this area, so an individual may experience some relief.
  • Value your charitable deductions appropriately to avoid an audit. Congress and the IRS have cracked down on charitable deductions in the past few years.

If you find yourself with an audit from the IRS, your best defense is to have a great offense -- a qualified tax attorney on your side. It's critical to your success to have the tax attorney involved early in the process to help you weigh your options and plot the best course of action. Your tax attorney understands the concerns being brought forth by the IRS and can help you get the appropriate documentation that supports and justifies your position.

Source: Forbes, "How To Avoid - Or Win - An IRS Auditor Court Battle," Dean Zerbe, Jan. 23, 2012