Few pieces of mail are as upsetting as a letter from the IRS telling you that you (or your company) will soon be undergoing a formal audit. Hopefully, you’ve kept amazing records that will quickly prove your innocence. However, it’s best to prepare for the worst and immediately contact your Peachtree City business attorney to obtain his legal advice.
Next, depending on the complexity of your most recent returns (and whether you’re a sole proprietor or have numerous employees), you should probably call your accountant to help you start locating all of the records you’ll need to make available.
In an article entitled, “Three Little Words” published in the September 2014 issue of Entrepreneur, writer J.D. Roth shares how he responded when he received a letter telling him about his upcoming IRS audit. (The three little words are “you’re being audited.”)
As you review these tips, keep in mind that you may need to adjust some of them if you’re running a fairly large company. Otherwise, most should still be applicable.
Getting Ready for Your IRS Audit and Behaving Properly During the Process
According to Roth, the first thing you must do is to contact all of your key business associates and give serious thought to hiring a tax lawyer to represent you – especially if you’ve been reporting some very complex investments (or requesting major refunds in recent years). You should also make sure you:
- Get immediately organized. If you haven’t been using software to track all of your business expenses in the past, be sure to start doing so after the audit. If you’ve just been tossing all of your receipts in a box that you’ve turned over to your accountant each year, call this person right away. Tell her/him that you need to obtain copies of the worksheets s/he used while preparing your most recent tax returns;
- Look for every relevant, written bit of proof that backs up your filings. This is important because it can be very difficult to convince an IRS auditor that, for example, you never kept any receipts tied to your business trip expenses. If necessary, go online to your banking website and print out all of your bank statements available for the year in question. Depending on which year is being audited, go personally to your bank and ask what it costs to obtain rushed copies of all of your business and personal banking statements for the year (or years) in question;
- Visit the IRS website at www.irs.gov and learn all you can prior to your audit regarding proper tax filings for the year in question. If necessary, consider buying a copy of the book, Stand Up to the IRS, written by tax lawyer Frederick W. Daily;
- Be courteous to your auditor. No matter how upset you are, try to remain calm. Hopefully, you’ll get away with just an audit on the first year originally mentioned to you. If not, you should be prepared to obtain additional statements from your accountant and others, as needed. Remember, it’s highly doubtful that your auditor was involved in choosing your tax filing for an audit;
- Don’t try to cover possible errors by filing a follow-up tax filing while the audit is still being run. This will not only look a bit suspicious, it can also complicate matters;
- Never volunteer information unless asked specific questions. It can be very easy to get carried away and start discussing business matters you forget to ever document. Just be succinct and honest when asked questions and chances are you’ll do just fine.
To obtain help with handling all of your Georgia business planning needs, please contact Shane Smith Law today. You can schedule your free initial consultation with a knowledgeable Peachtree City estate planning attorney by calling: (770) 487-8999.