Archives for June 2013

It finally happened . . . you received a notice in the mail from the IRS.

After glancing furtively at the unopened envelope sitting on the corner of your desk for a few days or weeks, you finally take a deep breath, open the letter, and with a sinking feeling, discover that your business has been selected for an audit.

You might decide to handle the audit on your own to avoid having to pay a tax professional to represent you. If this is  your choice, you’ll meet with an ostensibly friendly auditor, answer the “nice” auditor’s questions, dig up, organize, and deliver all of the canceled checks, copies of paid bills, cash receipts, bank statements, loan document, spread sheets, and whatever else the auditor requested.

The auditor will process all the information you provide and, if you luck holds, you just might walk away with a minor audit assessment.

But what happens if the auditor doesn’t allow deductions and/or overestimates your income and presents you with an unfair or unjustified assessment?

You can complain all you want while you’re writing a big fat check to pay taxes, interest and penalties [Read more…] about “AUDIT-PROOF” YOUR BUSINESS FROM IRS AUDITS? – Part 3

Knowledge is power. If you understand why the IRS selected your business for an audit and what the auditor will examine when he/she reviews your books and records, you can minimize the proposed IRS adjustments.

Are you in an industry that the IRS has targeted for audits? Are you aware that the IRS has published Audit Techniques Guides (ATGs)? These guides provide IRS examiners with insights into issues and accounting methods unique to specific industries. While these guides are designed to provide guidance for IRS employees, business owners can also benefit by understanding what issues are of concern to the IRS, what audit techniques will be used by the IRS agent, interview techniques used, and how the IRS evaluates its findings.

Some industries that the IRS has targeted include [Read more…] about “AUDIT PROOF” YOUR BUSINESS FROM IRS AUDITS – Part 2

According to the Associated Press, the Internal Revenue Service increased audits by nearly 11 percent from 2010 to 2011. Ouch!

An IRS audit reverses the constitutional presumption of innocent until proven guilty because you are presumed by many an IRS auditor to be guilty of underpaying your taxes. Makes you want to do anything to “audit proof” your business . . . right? Of course.

The problem is that you can’t audit proof your business and anyone who claims that you can is either misinformed, naïve, or a shameless charlatan. While you can’t actually “audit proof” your business, you can minimize the risk of an IRS audit by understanding how the IRS targets business owners. The IRS is most interested in: [Read more…] about “AUDIT PROOF” YOUR BUSINESS FROM IRS AUDITS – Part 1

Federal law requires U.S. citizens and resident aliens to report any worldwide income, including income from foreign trusts and foreign bank and securities accounts. In many cases, affected taxpayers will need to complete and attach Schedule B to their individual tax return. Part III of Sch. B asks about the existence of foreign accounts, such as bank and securities accounts, and usually requires U.S. citizens to report the country in which each account is located. Certain taxpayers may also have to complete and attach Form 8938, Statement of Foreign Financial Assets, to their individual tax return filing.

Separately, taxpayers with foreign accounts whose aggregate value exceeded $10,000 at any time during 2012 must [Read more…] about FOREIGN REPORTING REQUIREMENTS FOR U.S. CITIZENS AND RESIDENT ALIENS