Upcoming Tax Audit? Read This
Tax audits can make even the most experienced business owner feel terrified. It involves the IRS taking an in-depth look at your tax return to establish whether it is accurate or not. It’s a high-pressured situation to be in, and the outcome could potentially put you out of business altogether. There are a number of reasons why your business might have been targeted for a tax audit. They may consider your deductions to be unnecessary, or you might have forgotten to file an important form. Whatever the reason, if you are asked to be involved in a tax audit, here is what you need to do next.
Respond to their letter
IRS auditors will almost always contact you via a letter to arrange a suitable location, date and time for your audit. It can be easy to put this letter in a drawer and forget all about it, whether on purpose or accidentally. Even though you might not want to take part, it something you have to do. So contact them as soon as possible. While you may want it over as quickly as possible, choose a date that provides you with plenty of time to get prepared. You should also agree to have the audit completed at an IRS office instead of hosting it in your home.
A tax audit can often be a long and complicated process. This is why it’s always best to hire an experienced tax lawyer to give you their support and knowledge of what the audit entails. They can help you feel more in control as well as assisting you in getting the best possible outcome.
So as soon as you find out you are required to partake in a tax audit, start your search for a suitable lawyer. You could go online and visit law firm websites. But often, word of mouth is the best way to find a tax lawyer. So talk to your business contacts to see if they know someone they would recommend to help you.
Start preparing your books
Excellent bookkeeping should be a task that all business owners make a priority. Never more so than when you have an upcoming audit. Presenting books to the IRS that are messy, not updated and disorganised will only prolong the process. It can also work against you and provide the auditors with evidence as to why you made so many mistakes on your tax return. So it’s crucial that you get them up to date and in check before the day of your audit arrives. To do this, you may have to hire an accountant to help you get back up to speed. Finding an accountant and updating your books can take time. So make sure you don’t leave it to the last minute.
With the advice in this guide to help you, your upcoming tax audit won’t be a problem. Listen carefully to the instructions given to you by both your lawyer and the IRS and be compliant with their requests. Start learning more about the appeals process too, just in case the result is a negative one.