A Short Guide to Tax Audits for Small Businesses

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A Short Guide to Tax Audits for Small Businesses
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• Despite the fact that audits are probably not as
  common an occurrence as most business owners
  might think, it still pays to do your best to
  avoid being targeted for one, by working closely
  with a tax and accounting professional,
  throughout the year.
• However, should you be selected by the IRS for a
  tax audit as a business owner (which likely means
  youve been managing your taxes without
  professional help), theres no need to panic,
  just read this brief guide to prepare yourself

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• Its important to recognize that most businesses
  dont get audited
• While this may be true and the statistics from
  recent IRS Data Books support this fact it
  doesnt mean that small business owners should
  become complacent and believe that even if they
  fail to file their taxes correctly or on time,
  that they still wont face an audit.
• They are a rare occurrence, but can still happen,
  so while not living in fear of being audited by
  the IRS, neither should you become lax with your
  taxes and accounting processes in general.

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• If a partnership is questioned by the IRS, who
  will be audited?
• A special audit regime known as the BBA
  Centralized Partnership Audit Regime, makes the
  entity level of partnerships responsible for tax
  audit monies owed and for making all appropriate
  amendments to returns. For S and C corporations,
  partnerships made up of 10 or lessmembers,
  foreign entities, and estates of deceased
  partners, these may be able to opt out of the
  audit regime, which will mean that the IRS will
  be forced to ask their questions of an individual
  partner.

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• In some cases, a simple mistake may just need to
  be rectified
• As is the case in many instances, it may simply
  be that some important information has
  accidentally been left out of a tax return, or
  income has been omittedthat was reported by
  another entity. If both parties can agree to the
  mistake, and the entity at fault agrees to
  rectify the error swiftly, that may well be the
  end of the matter. Should you believe that the
  IRS are at fault and you wish to appeal their
  judgement, however, you may do so, provided you
  act quickly.

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• There are many stages to an audit appeal
• Pursuing an appeal should an audit not go the way
  you had expected it to, can take several stages,
  the first of which is to file a small case
  request if the amount owed is 25,000 or less.
  Appealing cases in which larger sums of money are
  involved, will involve a different procedure at
  an elevated level.
• The IRS are not at the top of the audit food
  chain
• The final decision regarding what a business owes
  to the IRS, is down to the Tax Court, and there
  is an appeal procedure available through the Tax
  Court for amounts of 50,000 and less, that is
  quicker and more affordable. Just be sure to take
  action swiftly if you are appealing a decision,
  as you only have 90 days from the time you
  received notification of the deficiency, to do so.

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• Audits arent common, but when they do happen,
  they can be frustrating and downright
  inconvenient. The best way to avoid being
  targeted for an audit is to work with a tax and
  accounting professional, and should you be
  targeted, they may also be able to guide, and
  even represent you, in front of the IRS.
• At Heyer Associates, we proactively assist our
  individual and small business clients in meeting
  their goals. Our key area of focus is ensuring
  that our clients remain compliant with federal
  and state tax laws by providing them with high
  quality accounting and tax services in Fort
  Lauderdale. If you are looking for individual
  accountant in Fort Lauderdale, Heyer Associates
  would be a right option.