Whether you are a sole proprietor or run a small business with partners and dozens of employees, you should be familiar with the tax laws that apply to your enterprise. One day you may receive notice of an audit by the IRS. While the thought can be stressful, by enlisting the help of a tax law attorney and following the information below, you’ll get through it and back to focusing on growing your company.
What You Should Know About Audits & Tax Law
What Is an IRS Audit?
An IRS audit is a review or examination of a taxpayer’s financial accounts and information. The purpose is to make sure data is reported properly under tax law and to confirm the amount of tax reported is correct.
Factors That Help Determine Who Gets Audited
Being singled out for an audit does not mean you have done something wrong. The IRS may make random selections, use computerized statistical formulas, or choose returns that relate to other taxpayers, such as investors or business partners, who are being audited. Receiving a refund or filing an amended return does not mean you will be audited.
How to Prepare for an Audit
The IRS notifies taxpayers in writing, specifying what documentation they want to see. An IRS audit may go back three years to review returns, but typically not more than six. Many businesses use a CPA when filing their returns, who should have these records on hand. Whether or not you have previously turned to a tax lawyer for help, seek one as soon as possible when notified of an audit to help cut through the legal jargon and deal with the IRS on your behalf.
Individuals and business owners who receive notice of an audit or need small business financial or legal advice in Texas often turn to Corey C Davis, CPA, Attorney at Law in Kerrville. With more than 10 years of experience as a CPA and an attorney, he has a strong record of skilled and effective representation of clients addressing state and federal tax law issues. To arrange a confidential consultation, visit his website now or call (830) 257-8800.