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Businesses prepare for audits

On Behalf of | Dec 12, 2022 | IRS Audits

Business owners and their Georgia enterprises may be selected for an Internal Revenue Service audit. There could be several reasons for the audit, including questions about reported income or deductions. Regardless of why the IRS intends to examine one or more tax returns, the business owner may benefit from preparing for the process.

Prepping for an audit

The IRS could conduct a field visit and send an officer to someone’s home or business. However, a significant number of audits occur through the mail. Sometimes, the IRS may request simple clarifications were evidence to support a claim. For example, someone who donated $10,000 to charity may face a requirement to present receipts. The submission of the receipts could be more than enough to satisfy the audit.

If the IRS wants to see a business’s records, the owner may need to get the company’s records in order. IRS audits could go more smoothly when the taxpayer provides clear, detailed and accurate financial records. The IRS would give the taxpayer time to prepare for the audit. The time allotted could help the taxpayer discover any errors or omissions in their returns.

Taxpayers could make honest mistakes on their returns, and the IRS’ discovery of those errors might result in a higher tax bill. Deliberate attempts to deceive the IRS could lead to legal troubles.

Dealing with the audit

Failing to respond to any written requests could lead to problems. Namely, the IRS may state that a nonresponse will lead to an assessment of additional taxes. Therefore, it seems advisable to respond timely.

Unfortunately, even those taxpayers who were in the right could find the IRS does not accept. The evidence presented to them. The taxpayer could ask for a motion to reconsider or file an appeal. In some cases, going to tax court or even suing in federal court could be an option that works in their favor.