Robert J. Fedor, Esq., L.L.C.

How business owners should proceed when facing an IRS audit

We've provided advice in previous blog posts related to how to avoid tax trouble and a potential IRS audit. Sometimes, however, despite best efforts to abide by tax laws and keep accurate financial records, a business owner receives notice that he or she is being audited by the IRS.

When facing an IRS audit there are a number of factors business owners should keep in mind. First, an audit can be random so it's best to keep calm and work collaboratively with the IRS agent that is assigned to handle your case. This including providing the agent with complete and accurate business and financial records in a timely manner and as well as answering any questions or concerns related thereto.

If an auditor finds discrepancies between those business financial records kept and those filed with the IRS, a company will be notified via written correspondence. If records do not match or there are other questions related to tax deductions or payroll matters, an IRS agent may visit a business to review additional business records and even interview employees.

If this occurs, again it's important not to panic. It's also important not to lie or attempt to cover-up or produce false documents. If a business owner is concerned the tax or payroll audit could lead to tax problems or criminal tax charges, it's wise to seek the advice and counsel of a legal professional. A tax attorney who has experience handling matters related to tax mistakes, tax evasion and tax fraud can be an invaluable resource when dealing with the IRS.

Source: Business Management Daily, "You're being audited! IRS answers 5 key questions," July 24, 2013