No one ever wants to face an audit of their company tax returns, but it’s a reality that many business owners must face at some point. If you’re about to get audited by the IRS, don’t panic. There are things you can do to prepare yourself and make the process as smooth as possible.
Understand the scope of the audit
Usually, audits are focused on a specific tax return from a certain year. You can expect a phone call or letter from the IRS asking you to provide documentation for that year. However, if you have a history of tax problems like unfiled returns or unpaid taxes, it’s possible that your audit could cover multiple years. If this happens to you, don’t take matters into your own hands. It’s a good idea to hire a qualified tax professional to help you prepare for the audit.
Gather your documentation
The IRS will ask you to provide a variety of documents related to your tax return, such as bank statements, receipts and invoices. Make sure you have all of these things organized and easily accessible. If you’re missing any documents, contact the IRS immediately and request copies. Don’t forget that the IRS also has the power to subpoena third-party records, so if you’re getting audited, ensure that you’re prepared for them to request information from your vendors, customers or other businesses.
Prepare a response
The IRS will usually send a series of questions related to your return. You’ll need to respond to these questions in writing, and it’s important to be as thorough and accurate as possible. If you’re not sure how to answer a question, or if there are any issues with the audit, you may want to hire a tax professional.
Once your response gets drafted and ready to go, it should go directly to the IRS agent assigned to your case. This can help prevent delays in processing your return and ensure that everything goes smoothly.
The best way to avoid any surprises during an audit is to be as organized and thorough as possible. Make sure you have all of your documentation ready and organized, and prepare yourself to respond to any questions the IRS may have.
