The IRS has increased the audits for small businesses by 50% compared to before. Therefore, the need to be careful about your deductions and taxes in North Carolina is more important than ever. If you have followed legal procedures, you should not fear an audit. However, the notification from the IRS can scare anyone.
If you are in this situation, do not panic. Instead, get help from an accountant in Charlotte, NC, to decide your next steps.
Steps to prepare for an IRS audit.
- Understand the process.
The IRS will notify you via mail if you are selected for an audit. However, you need to be very careful as there are many fraudsters and scammers who pose as IRS and can try to reach you through text or phone calls.
A genuine IRS will never contact you by telephone. After you receive the notification, the IRS can perform an audit in two ways: by mail or in person. A mail audit will ask you about your additional information, such as income, expenses, etc.
You will need to send a hard copy detailing your payments or transactions in question. An in-person audit interview may take place in your place of business, home, or the accountant’s office.
- Gather all your records.
Make sure you have all relevant documentation together to back up any deductions or exemptions you claimed on your forms. In general, the IRS welcomes digital copies of records.
However, if you do not have all of your records, you can get duplicates from financial institutions and vendors. Get started with the procedure as soon as you are notified about the tax audit, as it takes a lot of time.
If you are a business owner, verify your bank records and compare them to your tax returns to ensure that you have recorded all of your income.
- Understand intentional and unintentional failures.
Taking intentional steps to reduce your business taxes through illegal means is called tax evasion, and it is highly illegal. However, if you are able to prove that certain issues were unintentional, for example, if you do not have records for a particular year, the IRS may grant you some grace. In contrast, if your actions were deliberate and intentional, it can cause fines and penalties to be imposed.
- Get professional help.
It is highly recommended to hire a tax professional during your IRS audit as this process involves a lot of your money. Having a good attorney on your side is very important, especially if your tax situation is complicated and there is some mistake in your tax reporting. They can guide you and ensure everything is handled correctly.
Facing an IRS audit can be daunting. However, if you have done nothing wrong, you can navigate it smoothly. If you are facing an audit in Charlotte, hire an accountant today!
