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 or you can belatedly call a tax professional for help. When that call is made to your CPA, you find that the fee you will have to pay is higher than it would have been if you had asked for professional help before the audit.
Why?
The fee will be higher because, before a tax professional can represent you, he or she will have to review all the correspondence between you and the IRS and then assess every document produced throughout the audit process to properly evaluate the propriety of the IRS assessments.
When you ask a tax professional for help before the audit, you have the advantage of being represented by someone who understands that IRS auditors have been trained to be friendly, to put you at ease, and to subtly convince you to share more information than you may legally be required to share. A tax professional understands what is behind each question the auditor asks and knows IRS policies, procedures and regulations and therefore knows if, when and why the IRS is on shaky ground. A tax professional, like an attorney, also serves as a buffer between you and the IRS, one of the government’s most powerful agencies.
What is the moral of the story?
Immediately open that letter from the IRS and then immediately call your CPA. Your CPA needs to begin preparing for the audit before the auditor arrives. By having an experienced tax professional handle the IRS audit, you will have peace of mind and you can then work on what you do best . . . grow your business!
Note: Because each business and how it operates is different, each company’s unique factors need to be analyzed when evaluating its potential exposure to an IRS audit.
We invite you to call 610-594-2601 today to make an appointment to talk about our risk of an IRS audit or how best to respond to that notice from the IRS. You can also schedule a free consultation at http://keysolutions.us/consultation.htm.
The author wishes to thank Businesswriters.biz for its valuable contributions to this posting.
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