Tag: Business tax audit

Your Business is Being Audited, What’s Next?

You recently learned that your company is being audited. Not to worry! You can overcome it. It is important to first confirm that the audit is legitimate. The IRS emphasizes that audits are always started via mail. It’sCaution Sign - IRS Audit Ahead a scam if you receive a call or email.

Even if you’ve established that the audit is genuine, you haven’t broken any rules. When there are problems with your returns and the returns of other taxpayers whose returns were chosen for an audit, you may occasionally receive a “related examination.” Other times, your selection may be entirely arbitrary and based only on a statistical calculation.

How does an IRS audit work?

In order to review your records, the IRS will conduct your audit via mail or in-person interview. An IRS office (office audit) or your home, place of business, or the office of your accountant (field audit) may host the interview. Keep in mind that we will first contact you via letter. The letter you receive from the IRS will provide all necessary contact details as well as instructions.

The IRS may ask for particular papers. For a company, these can be personnel records like uniform guidelines or dress regulations, requirements for continuing education, W-2 reimbursement statements, and Schedule K-1. The IRS is willing to accept some electronic records generated by tax software in place of or in addition to other kinds of records. You will be informed of what is acceptable by the auditor.

You should be aware that the law requires you to maintain all the documents you used to draft your tax return for at least three years following the filing date. In an audit, the IRS generally states that it will take into account returns submitted during the last three years. However, it may add additional years, but never more than six, if it discovers a significant error.

What rights do you have in your audit?

The government might act in this manner. What you can anticipate is as follows:

IRS staff are treated with professionalism and courtesy.

Privacy and secrecy about tax matters.

having knowledge of the IRS’s requests for information, how they would use them, and the consequences of not providing them.

a self- or authorized representative making a representation.

the ability to challenge disputes in front of the IRS and in court.

What’s the audit’s outcome?

One of three things can happen to end an audit:

The same: You supported every aspect of the review, but nothing changed as a result.

Agreed: You are aware of and accept the adjustments proposed by the IRS.

Disagreed: You acknowledge that the IRS has proposed modifications, but you don’t agree with them.

Working closely with a certified tax professional is your best option from the minute you receive the notice until the issue is finally resolved. The audit will proceed as fast and smoothly as possible if you do this.