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Preparing For A Business Tax Audit


Even those who make every attempt to be accurate when completing their business income tax returns could end up the subject of an IRS audit. Fortunately, there are steps that taxpayers can take to make the process go more smoothly, so if you recently received notice of an IRS audit, you should think about reaching out to an experienced Florida tax & IRS lawyer who can help you prepare.

Types of IRS Audits

The IRS conducts three different types of tax audits, including:

  • Correspondence audits, which take place via letter and involve requests for verification, additional information, or error correction;
  • Office audits, in which taxpayers are asked to meet with, and bring specific documents to, a representative at an IRS office; and
  • Field audits, which are the most comprehensive type of audit, in which an IRS employee comes to the taxpayer’s place of business and can request documents, previous years’ tax returns, and other forms.

How a taxpayer goes about preparing for a tax audit will largely be dictated by what type of audit is being carried out. Field audits, for example, generally require more preparation, including collecting extensive records, while correspondence audits can often be resolved relatively quickly and without any official meetings.

Limits on Audits

The IRS is allowed to audit any business or personal tax return, as long as it does so within three years of the filing. It can, however, collect back taxes owed for up to ten years. There are also exceptions to these limits on audits and collections. For instance, the IRS is not required to comply with limits on audits and collections in cases of tax evasion, filing a false return, or failing to file a return at all.

Preparing for an Audit

Taxpayers who receive an audit request may want to take a few preparatory steps, which can help the parties reach a resolution more quickly. This could include:

  • Carefully reviewing the IRS request with an experienced tax attorney;
  • Getting financial records in order, organizing them by year and type (i.e. income, expenses, bank and credit cards records, and information from vendors, as well as documentation related to business travel);
  • Attempting to reconstruct any lost or destroyed records by accessing backup files; and
  • Ensuring that personal and business expense records are kept separate.

These steps can make all the difference in how quickly or successfully an audit is resolved. For instance, taxpayers who fail to organize their records properly could be fined by the IRS for failing to keep accurate business records.

Set Up a One-on-One Meeting with a Dedicated Florida Tax Attorney

If you own your own business and recently learned that you are being audited by the IRS, you may be feeling uncertain about what to do next. At the office of Ronald Cutler, P.A., our legal team is well-versed in handling IRS audits and the types of strategies that can help resolve these kinds of issues as quickly and as painlessly as possible. Please call dedicated tax & IRS lawyer, CPA, and Former Special Agent FBI, Ronald Cutler at Ronald Cutler, P.A. at 386-490-9949 today.