Everyone Fears The IRS Audit
If you run a small business, you may have to face an audit from the IRS at some point. An audit is a process where the IRS examines your tax returns and financial records to verify that you reported your income and expenses correctly. Audits are stressful and take time to resolve, but it mustn’t be a nightmare. Don’t Panic! Here are some tips on what to do if you receive a small business audit.
Don’t Panic! What to Do if you Receive Notice
Don’t panic! An IRS audit doesn’t mean you did something illegal or must pay a lot of money. It could be a random selection or a mistake on your tax return. The IRS will notify you by mail if you are selected for an audit and will tell you what documents and information they need from you. You can appeal the audit decision or request more time to prepare.
Get Organized
The best way to deal with your small business audit is to cooperate with the IRS and team up with your small business accountant. Gather all the relevant records and receipts that support your tax return, such as invoices, bank statements, payroll reports, etc. Also, hire a tax professional or an accountant to help you with the audit process and represent you before the IRS.
Respond Promptly
The IRS will give you a deadline to respond to their audit request, usually 30 days. Take your responsibilities seriously, which could lead to penalties or further scrutiny. If you need more time, contact the IRS and explain your situation. They may grant you an extension or reschedule the audit.
Know Your Rights
As a taxpayer, you have certain rights during an audit, such as the right to be treated fairly and respectfully, the right to know why the IRS is auditing you and what they expect from you, the right to appeal the audit results, and the right to have a qualified representative assist you. You can find more information about your rights on the IRS website or Publication 1, Your Rights as a Taxpayer.
Negotiate if Necessary
If the IRS finds any errors or discrepancies in your tax return, they will propose adjustments and send you a notice of deficiency. You can request an appeal regarding their findings. If you don’t, you must pay any additional taxes, interest, and penalties that apply. If you disagree, you can challenge their results by filing a petition with the Tax Court or requesting an alternative dispute resolution method, such as mediation or arbitration.
Peace of Mind
An audit can become a nerve-wracking experience for any small business owner, but it doesn’t have to ruin your business or peace of mind. By contacting a small business accountant Franek Accounting, you can confidently handle an audit and minimize its effect on your finances and business. Don’t Panic! Call Franek!
Sources-Negotiating With the IRS Is Possible—Here’s How (realsimple.com)
Understanding taxpayer rights: The right to finality | Internal Revenue Service (irs.gov)
How to Deal with the IRS During a Personal Tax Audit; Rights & Tips (debt.org)
Audit Report/Letter Giving Taxpayer 30 Days to Respond – TAS (irs.gov)