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Showing posts with label IRS administrative summons. Show all posts
Showing posts with label IRS administrative summons. Show all posts

Monday, September 7, 2015

Strategies to Beat a Small-Business Audit: HOW TO DEAL

How to triumph over an audit?
There are a number of ways a small business can become targeted for an audit by the IRS. Some of the most common are DIF Scoring, Examination Referrals, and Document Matching. It's essential to understand why your business has been selected to be audited.

The "discriminant index function," or "DIF," is a computerized score assigned to filed returns. The mathematical formula used to derive this score is not revealed to the public, but the higher the score the more likely the audit. Factors such as reported deductions being higher than reported income are red flags. Audits of a related party can also trigger an audit for you. (i.e. If the IRS sees that company XYZ made payments to ABC Inc., they may check if the payment was reported by ABC.) In addition to these practices, the IRS also matches income reported by the payer on 1099 or W-2 forms to the payee's individual tax return to ensure the income is reported.

So, need some help? Hire a professional CPA with experience in IRS Representation. Call GBC Audit Services for help now at 678 366-9232!
And take some advice from a former IRS Agent's angle:

  • DISPUTE THE "HOBBY LOSS" THEORY: According to the Internal Revenue Code Section 183, deductions are limited when an activity is not engaged in for profit. This is known as the "hobby loss rule." If business losses have been disallowed due to the hobby loss rule, it is essential to prove both a business profitability strategy (marketing plans) and prior success to show that the current losses are temporary.
  • CLAIM MISSED DEDUCTIONS: Many business owners may not know it, but an audit is also  a great time to submit documentation for overlooked deductions. Such deductions may reduce the taxpayer's liability or possibly generate an overpayment of taxes, which can offset any deficiencies determined by the IRS.
  • BE CREATIVE IN SUBSTANTIATING YOUR DEDUCTIONS: Keep in mind that the IRS allows for third-party documentation, oral testimony and other forms of verification substantiating expenses, so if your business lacks documentation to support business mileage reported, consider using Google maps, clients' records and past invoices to estimate mileage. Another example would be if you no longer have receipts or documentation for certain expenses claimed, take the time to retrieve prior bank records or credit card statements. It is also beneficial to make contact with vendors to request proof of payment.
  • GET PROFESSIONAL HELP: If you feel overwhelmed by the mere mention of the IRS, it may not be a bad idea to get a tax attorney, accountant or enrolled agent to fight on your behalf. That way, you can remove yourself, emotions and fears from the equation completely. Begin by submitting Form 2848, "Power of Attorney and Declaration of Representative," to the IRS. They will be required to make direct contact with the agent on your behalf.
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READ MORE>> www.bankrate.com: 4 Ways to Beat Small Business Tax Audit
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Call GBC Income Tax Services today at 678-366-9232 for all your tax and IRS needs!
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Wednesday, April 17, 2013

Do you need to meet with your tax representation prior to being audited by the IRS?

Having excellent experienced tax 
representation is extremely
 important and invaluable
during an audit by the IRS.
People who acquire tax representation for their tax audits, often wonder whether or not they need to meet with their actual tax representative.

The good news is that if your time is extremely valuable and you hire tax representation to represent you to the IRS, you usually do not need to meet up with them at all. 

Through the Power of Attorney (form 2848), your tax representative can handle all the dealings with the IRS on their own. This includes even being able to sign final agreements with them after the tax audit of your business is complete.

One thing to note is that tax representation can be extremely useful for people who are incredibly busy, however there is a caveat that needs to be talked about. The IRS can still force you to appear by using what is called an “administrative summons”. This administrative summons is most often used if your IRS representative is not cooperating with the IRS and sharing all the details they are looking for. Often this happens too if they are expecting or have suspicions of some sort of fraudulent behavior with your filing.

In this case, having very good tax representation is extremely important and invaluable. They can help you save yourself from possible pending criminal charges which the IRS take extremely serious. If you do know you filed wrongly, or inaccurately, you should hire help right away to help you correct the mistake.

Often people in this situation succumb to:
  • Fabricating receipts
  • Fabricating records to support invalid deductions
  • Lie to the examiner about income or other items

High quality tax representation whether you are in Atlanta, Georgia or anywhere else is money well spent and is often worth its weight in gold (solid gold).

Typically, it is very difficult for the IRS to prove underlying tax evasion. Doing any of the above three things though is what on average leads to the taxpayers ultimate downfall. Honesty truly is the best policy. Regardless, having a good tax representative who is well versed in criminal cases or potentially criminal cases could end up saving you from the wrath of the IRS.


GBC Income Tax Services is a proud member of the Atlanta Better Business Bureau, is an accredited BBB member with an A Rating.  
Visit our BBB profile here.

Call GBC Income Tax Services today at 678-366-9232 for all your tax and IRS needs!

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