September 3, 2015
IRS Audit Process Small Business Chicago Illinois
Although every IRS Audit is a little bit different, they all have common elements.
It begins when they send out a letter that basically does six things:
1 – Informs you of the examination
2 – Informs you of the individual returns and the years under examination
3 – Gives you a date, time and place for the Audit
4 – Gives you the Contact Name and Contact Information of The Auditor
5 – Provides you with an initial list of documents to gather
6 – Informs you of your rights as a Taxpayer
After you receive the notice, the next thing for you to do is to get audit representation. Handling this yourself, or having a bad representative, is the most dangerous position that you could be in. The IRS in many ways, is just a collection agency. When agents sit down with individuals that don’t speak taxation, aren’t educated in tax law, and are inexperienced in the audit process, the agent collects much more for the government.
If you are in the middle of an examination and the accountant that you have handling it is doing a bad job, you are under no obligation to retain this poor counselor. You have the right to change at any time. You neither have to do this alone, nor do you have to keep a bad representative.
After retaining competent representation, you must put together the proper audit documentation mentioned in the audit letter. Many clients will ask questions like, “Why do they want this?” Or, “How is this possibly relevant?” Being uncooperative in these investigations is the wrong move. In an IRS Audit you are guilty until proven innocent. Innocence is proven through providing little pieces of original documentation such as canceled checks, payroll registers, general ledgers, accounts receivable details, inventory counts, etc. If you don’t have this documentation, then you should immediately fire your current accountant. It was your accountant’s job to inform you of the law and make sure that retained these items. If they have failed, you’re on the hook and possibly in trouble.
Usually, you can get copies of many of these items from the original issuer, such as bank statements from a bank. Other items can be much more difficult. If you didn’t document your year end inventory, or keep track of your accounts payable, then you have a problem. Two or three years after the fact, how are you going to find this? Having an experienced professional representative can really help. In many instances, we can work through these issues with the government using other pieces of evidence.
We generally try to have audits held in our offices rather than at your place of business. It’s always better to not have the government at your business scaring your employees and intimidating your customers. In many instances, you won’t even have to attend the audit itself. It’s generally better to not have a client there in the first place. If you get nervous and say the wrong thing, it will not help your case.
Many times we are referred cases which are very difficult. Cases where the company is obviously guilty of tax evasion and our main job to make sure that the owner does not serve any jail time and the amount owed is reduced as far as possible. Other cases where all of the records were lost in a flood or just not kept can be challenging. We also handle multi-jurisdictional cases as well as estate audits. Whatever your needs may happen to be, the professionals at Accounting Solutions can help.
If you are having problems with your IRS Audit Process Small Business Chicago Illinois or have issues with your accounting in general, we would love to help. I enjoy hearing from my readers, and can be contacted at
Chris@AccountingSolutionsltd.com
Additional Accounting Articles and information on my firm can be found at
www.AccountingSolutionsLtd.com
Chris Amundson is the President of Accounting Solutions Ltd., a full service public accounting firm of Certified Public Accountants and Enrolled Agents handling the bookkeeping, accounting, tax preparation, and audit representation needs of Businesses, Estates, Trusts, and Upper Income Individuals.