Tips from March 11, 2010
The Small Business tips today discuss types of tax audits.
- Correspondence
Audit: Simple procedure. The IRS requests you to document an item on
your return by a specific date. Routine test for compliance.
- Field
Audit: The dreaded audit. IRS asks for documentation of various items
on your return and meet with an IRS agent for thorough review of
records. Be prepared to answer questions and have all paperwork needed.
- Taxpayer
Compliance Measurement Program Audit: Lengthy and detailed. Document
and provide proof for every single item in your return. IRS and
Congress use this for research and statistics, and are arbitrary
regardless of how careful and perfect your tax return is.
- Criminal
Investigation Audit: Suspicion of tax evasion. The IRS will try to
prove you have purposefully not paid your income taxes. If they are
successful, you can face large fines and jail time. If you face this
type of audit, you should retain qualified legal counsel.
Daily
Overview: There are several types of audits, from complex reviews to
cover every aspect of your business to simple requests for a survey.
Don't panic if you hear you are being audited. Stay calm, find out all
the information, and proceed from there.
We post these small business tips to our employee's Twitter account each day, Monday through Friday. This is a reposting of those tips.
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