Replying To an IRS Business Audit

IRS Business Audit

If you received a business audit letter from the IRS in the mail, chances are you probably experienced a rush of stress and anxiety. It’s only understandable that getting any kind of notice from the IRS is enough to ruin someone’s day. Depending on the situation, the IRS may request more documentation or wish to visit your home or place or business for an interview. Either way, it’s important to know what to do next.

Office Audits

The IRS representative handling your audit is likely to contact you for a thorough interview regarding the details on your tax return, and ask for evidence to support them. Each deposit into a business account may be viewed as taxable income, unless you can show otherwise how it is not. There may be civil penalties or criminal charges if you are not able to prove that the return filed was correct or can convice the auditor that errors were not made with intent to commit fraud.

Field Audits

These types of IRS audits are the most in-depth, and come along with an interrogatory examination. The IRS agent for your case may request to meet you in your business or home, and then question you about each line on the tax return. After speaking with you, the IRS agent will reach one of the following conclusions:

  • Information on the tax return was accurate, and the taxpayer doesn’t owe money to the IRS.
  • The taxpayer owes more tax or interest to the IRS, and may face civil fraud penalties.
  • Evidence of fraud is present and the agent is mandated to report it to the criminal division of the IRS to develop a criminal prosecution case.

Correspondence Audits

IRS notifications are usually sent through mail, and will instruct as to whether an office audit, field interview, or specific documentation is required. For correspondence audits, a taxpayer will have to mail in paperwork that supports information provided on a tax return. If you don’t have records that substantiate your claims, then it is advised that you speak with a lawyer right away before proceeding.

 

A business tax lawyer from Barlow Tax Solutions has seen the way that IRS actions can ruin people’s lives. It is always in the best interest of the taxpayer to speak with a lawyer if any of the above information resonates with their situation.