Companies are selected for business audits based on their tax returns. If your company is chosen, you’ll have to send more information about your operations to the Internal Revenue Service (IRS). If this is your first audit, you may have many questions about the process. To help you navigate this situation, here are answers to a few you might have.

What You Need to Know About Business Audits

Why was my business chosen?

In some cases, the selection process is random—the IRS chooses certain submissions based on a computer algorithm, then sees how they match up against the average return.

You may also be subjected to a audit if your return features items that are related to another taxpayer’s audit, such as someone you paid who didn’t report their income.

Is every audit conducted in person?

No. While some audits do require an in-person interview—either at an IRS office, an accountant’s office, or on your premises—most are first conducted through the postal service.

In this case, the IRS may mail you a letter asking for clarification on certain aspects of your return, which you must send back to them. In some cases, you may have a follow-up in-person interview.

Why is my audit regarding information from a few years ago?

The IRS is permitted to perform audits on all returns filed within the last three years. However, if there is a significant issue, they may go back six years or more. Generally, the IRS tries to issue audits within two years of submission.

What are the possible end results?

If you agree with the IRS agent’s decision, they will make their recommended changes to your return, possibly resulting in you having to pay more taxes or receiving a refund.

If you disagree with their findings, you can meet with an IRS manager or file an appeal. In other cases, you may be able to settle any concerns or confusion the IRS had about your return, resulting in no changes.

If you were selected for a business audit, turn to Engelson & Associates of La Crosse County, WI, for assistance. This team of three certified public accountants will help you through every stage of the investigation, ensuring the process goes smoothly. They will also help you prepare for future tax seasons to minimize the chances of another audit. Visit their website to learn more about their services, or call (608) 526-3437 to schedule an appointment.