ax audit representation can be understood as a professional defending a taxpayer during an IRS audit. Tax audit representation is also called audit defense. Many small businesses are running in Canada.
Therefore, it becomes important they understand the importance of keeping accurate financial records. When an income tax audit takes place, the taxpayer gets the right to have a professional representing them.
However, it is essential that the representative has the credentials needed for representation, and they should also have permission for the same. Different types of people can represent the taxpayer, including CPAs (Certified Public Accountants) and attorneys.
The professional develops a strategy to defend the taxpayer when the time comes. They also help taxpayers have the documents they need from the tax authorities. They are also present in all the meetings and are there for the taxpayers.
As a business owner, you should understand the need for a professional to control your finances and other records. You can contact an experienced person and get tax services for small business.
What are you supposed to expect during an audit?
Unfortunately, some people catch themselves caught in an audit. However, the audit letters received by people are commonly the authorities asking for more information about the tax returns.
You can also be asked to mail them a statement stating your current financial situation and the deductions. You need to remain calm during such situations and try to prepare for the steps that you need to take ahead.
What are the steps that you need to take during a tax audit?
There are certain things that you should keep in mind and follow strictly. Let us discuss them below:
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Make sure not to ignore the IRS letter:
You must take the letter from the IRS seriously during the audit process. The situation can get worse if you do not respond to the letter in time. However, your representative can ask for some time from the IRS.
You might need some time to gather all the documents that are going to be required during such times. You can ask for a fourteen-day extension; it is a reasonable amount of time to ask.
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Decide as to whether you need an audit representative:
As discussed earlier, commonly the letter asks for more information regarding your financial position. If they are asking for receipts or about your business meals, simply putting in the required paperwork should do the work.
In such cases, lawyers or other professionals might not be needed. However, if you are not sure what they are asking, you should consider contacting a professional to get their advice on what you should do next.
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Tell the audit authorities what they want to know:
It would help if you honestly told them everything they want to know. Do not add on extra information either; it is just exactly what they ask for. Usually, the IRS comes up with particular questions, and they need to be answered in a specific manner, too.
Try to answer all their questions to the best of your ability. It would help if you answered all the questions asked by the IRS agents. If they are asking about your income, it is probably because they think you did not report correctly.
What are you supposed to expect after the IRS audit?
Once the audit is completed, the agent will see if there are any penalties or any taxes you owe. Since they usually do not want to drag the process forward, they might get you a good deal. This is another scenario where having a good representation can come in handy.
Get your audit representation and save yourself from the hassle!
As a small business owner, you are already going to have a lot on your table. There are many business activities that you need to look into if you are trying to expand the business. Thus, having a professional becomes necessary.
