Small business owners find it hard to go through an IRS audit. After receiving an audit notice, the first thing to do is to thoroughly read it and gather all necessary paperwork. Consulting with a tax professional will always help you understand the audit process and ensure compliance with tax laws. When responding to IRS, please note to pay special attention to the details. Any mistakes or discrepancies will raise more queries or guarantee additional research. The procedure can go more easily if taxpayers reply to the IRS right away, and act professionally while being audited. Taxpayers can even dispute the IRS’s decision if it determines they are bound to pay additional taxes or fines.
General IRS Audit Process
The general process of an IRS audit involves several stages. The exact process varies depending on the type and scope of the IRS audit, but the following outline is a general overview.
- Notification: The IRS will send a notification letter to inform the taxpayer that they have been selected for a tax audit. The letter will outline the reason behind the audit as well as the paperwork the taxpayer must submit.
- Preparation: The taxpayer is required to compile all essential records and papers for the audit. To comprehend the audit procedure and make sure they follow tax rules, they can consult with a tax professional.
- Examination: To ensure that the tax return is accurate, the IRS will review the taxpayer’s files and records. An on-site visit to the taxpayer’s residence or place of business may be necessary.
- Communication: The IRS will keep in touch with the taxpayer during the IRS audit process to clarify any problems or discrepancies discovered and, if necessary, to request further information or documents.
- Resolution: The IRS will report any changes that need to be made to the taxpayer’s filed return after the examination is finished. The taxpayer will have the chance to refute any conclusions or bargain a deal with the IRS.
- Appeals: The taxpayer has the right to challenge the judgment in court or through an administrative procedure with the IRS if they disagree with the audit’s conclusion.
Overall, the process of an IRS audit can be complex and time-consuming, but being prepared and cooperating with the IRS always helps the process go more smoothly. Complex IRS audits need tax professional help from a tax audit representation company that can analyze your circumstances and represent on behalf of you in front of the IRS for the audit sessions.
How Long Will the Audit Process Take?
Several variables can affect how long an IRS audit lasts. The sort of audit being undertaken is one of the important factors. For instance, if a correspondence audit just entails looking through a small portion of a taxpayer’s return, it might be finished in a couple of weeks. On the other hand, a field audit that needs to visit the taxpayer’s place of business or residence and study a substantial number of records will take several months.
The complexity of the taxpayer’s return, the volume of records and papers being examined, and the IRS agents’ and taxpayers’ availability are additional elements that affect audit tenure. Additionally, if the audit identifies issues or discrepancies that require further review, the process will take longer.
It’s crucial to keep in mind that the timeframe of an IRS audit can be extended if the taxpayer refuses to provide information or documents when requested, contests the audit’s conclusions, or tries to reach a settlement with the IRS.
The duration of an IRS audit varies significantly based on the particulars of each case. But taxpayers can attempt to keep the process moving and make sure that the audit is finished as soon and effectively as possible by collaborating with the IRS agent.
These time-consuming audits can frustrate small business owners as they have to deal with extra work besides running their companies. Also, they will not find enough time to meet the IRS agents and answer all the questions. Thus a tax audit representation firm like IRS Audit Group can help them by representing on behalf of the client. The company is located in Los Angeles, California but as the IRS is a Federal Agency, we can request the case to be transferred to a local IRS office in Los Angeles. Contact us to learn more about our services and get a free consultation on your case.
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