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Audits are often terrifying experiences for small business owners. The reason for an IRS audit is the known fact of the Tax Gap.
The gross Tax Gap is the difference between true tax liability for a given tax year and the amount that is paid on time. It is comprised of the non-filing gap, the underreporting gap, and the underpayment (or remittance) gap.
Whether you’re subject to an income tax audit, unreported income is usually the first stop for an auditor. Income is often reported to the government by multiple parties. The government has every right to double check their records.
Certain expenses have a history of abuse, such as meals and entertainment or vehicle expense. The IRS rules for have changed recently from the Congress passing the Tax Cuts and Jobs Act (TCJA).
You will have time to prepare your evidence, usually many months. But the best process would be to gather the information that is requested and submit to the auditor as soon as possible.
Feel free to contact us for assistance when the IRS requires you to start an audit. Complete the contact form and we can start the process to assist you with applying the appropriate tax rules.
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