What happens if your business gets tagged by the IRS for an audit?
A business audit is generally extensive and protracted, and there is a good chance the owner’s individual tax returns will be audited as well. Beyond the stress of the audit, the major fallout concerns the loss of productivity within the organization. Cash flow is often diminished because administrators, including accountants, bookkeepers, financial officers, and managers, must focus on providing to the IRS all the reams of documentation required regarding gross income and expenses.
The IRS can also exhaust a great deal of company time by interviewing employees about routine processes and procedures of the business. The more personnel questioned, the greater the risk that a company representative may inadvertently disclose information that can lead to even more thorough scrutiny by the IRS. Even worse to settle the score, a disgruntled employee could provide erroneous information to the IRS.
Possible side effects of an uninformed response to an IRS audit of your business:
The IRS agent may decide to conduct audits on additional years rather than concentrating on the year under examination.
- The audit can result in increased IRS debt, including penalties and interest.
- The audit may lead to questions concerning employment taxes and related issues.
- The IRS agent may decide that you should be held personally liable for outstanding payroll debt.
- And an ineptly handled audit could lead the IRS to close your business forcibly.
Our goal is to minimize the stress and interference in your personal life during the audit, while at the same time securing a favorable outcome and encountering little risk that the IRS will expand the audit beyond the years already under examination. Handled with professional care, your audit should not be a taxing experience.