What You Should Know About IRS Correspondence Audits

Many of these  types of audits occur when
mistakes in accounting happen.

Much ado has been made about the fact that IRS audits are on the  decline, however, this  does not mean the IRS can't, or won't, come knocking on your door.  This is especially true if you own a small to mid sized company, as these types of  audits are actually on the rise. 

Correspondence Audits and What They Mean for Your Business

When it comes to IRS related tax audits, large and small business can face two kinds. One is the face-to-face audit.  This particular process is largely handled in person, with the agent and business owner pouring over relevant documentation to assess how much money, if any, a business may owe in  taxes.

The type of audit small to moderate sized companies most often face however, is the called a correspondence audit. As the name implies, this type of  IRS review is generally handled via  snail mail, and can be disputed in lower tax courts. Even so, if handled incorrectly,  a correspondence audit can lead to a  closer examination  of your company's financial  records, which could lead to significant payouts.

This is something a struggling small enterprise can ill afford.

Dealing with a Correspondence  Audit

Correspondence audits usually occur after an IRS agent is alerted to potential issues on the company's tax return.  It could be something as simple as a clerical  error or  missing finance  documentation.  In such instances, an agent will send out an official letter to the business owner requesting further information for clarification.

Now, a correspondence  audit may appear innocuous enough but don't be fooled.   These types of government examinations can be a drain on time and financial resources as you try to get he matter sorted.  Making matters worse, there is usually very little recourse for businesses who receive these types of  notices in the mail, as contact information is seldom supplied.  In other words, you  receive  the notice with on o way to call  or ask questions regarding the  issue.  The only other option  a company will have at this juncture is to request an in office meeting with your local  IRS representative, but this request may or may not be honored--and that's perfectly legal.

How to Avoid a Correspondence Audit

When you receive one of these little bomb shells in the mail, you will have to respond to it by law or face heavy fines or penalties.  Many individuals try to gather the requested info and send it off hoping that will end the matter.  This may not always be the case.

As the old saying goes, an ounce of prevention is worth a pound of cure. Many of these  types of audits occur when mistakes in accounting happen.  Or worst yet, the company's finance department has lost or failed to keep up with pertinent records.

Avoiding this scenario may be as simple as hiring an outside accounting firm to handle your financial record keeping and tax filing. GBC of Atlanta is familiar with ins and out of Correspondence Auditing and related disputes and can act on your company’s behalf. Contact us today to learn more about how to protect your financial investments and remain in good standing with the IRS.

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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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• GBC Tax Offers Atlanta Experienced IRS Representation
• Essential Financial Services
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• Visit the Internal Revenue Service's Website
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Tax Season is Every Season : How To Avoid An IRS Audit

What Does The IRS Take Into Consideration
When Performing An Audit?

Did you know that you are more likely to face an audit when Tax Season is in full swing.  In either case, it pays to be ready, no matter what.

Although Tax Season for all officially ends and begins on a given calender day, one mustn’t make the mistake that so many businesses do, by thinking  you are safe from scrutiny  once the season comes to a close.

Remain on Guard

The Internal Revenue Service has a list of things it looks for when considering a business for potential audit. These red flags can pop up for any  reason, at any  time. As this is the case, it remains imperative to  be on the look out for potential  accounting issues, and, when and wherever possible, to outsource with a reputable accounting firm.

Indeed, the IRS can  perform an audit for any reason any day of the week, 365 days a year.


Why?

Having a second pair of professional eyes lowers your risk of IRS investigation, which  all too often approaches a corporate audit with a “guilty  until proven innocent” mindset.

What to Look Out For 

The IRS looks for a wide variety of things that  could potentially clue them in  the idea that you may not be on the up and up, at least in their eyes. When it comes  to intensive government investigations, an uncrossed “t” and undotted “i” simply means payments weren't given to Uncle Sam  in due time, and that can spell trouble for you and your business.  Even so, agents will and often do consider human errors during an audit, but they will often need detailed documentation  to make such determinations—this  is when accurate record keeping becomes crucial.

So, what are some of the things the IRS will take into consideration when performing an audit?  There are quite a few, with the most common being:

Ready and Petty Cash – Businesses that run primarily on cash transactions or  have a lot of petty cash on hand for odds and ends, may garner significant  attention. This is because cash is hard to trace and can easily be hidden or  passed under tables.  In such cases, the IRS may also evaluate your --

Lifestyle and Charity Contributions –   When cash flow is difficult to determine, the Internal Revenue Service will often assess  an individual's social status as it relates to what neighborhood they live in, car they drive, how expensive their clothing  is and even the size of charitable contributions. They weigh these things against the person's assets, inheritances and  the money reportedly take in.  Of course, someone with a sizable income will be able to amass a wealth of creature comforts. If you are pulling in less than 110k a year however, living in Beverly  Hills and buying a Bentley every year should be well out of your price range.

While the IRS uses this assessment as tool in business that deals largely in cash, they can and often employ this methodology in affirming potential tax evasive or mismanagement  for other types of payment based goods and services.

Business Expenses and Reports  – It is not unheard of for  an employee or businessman  to  expense corporate travels, and while even entertainment and meals can be  legally deducted, you have to be able to prove their relation to  company related activity. This is why it is prudent to keep all receipts and documents  on file on the in case they are needed to justify an company expenditure during an audit.

Work Form Home Write Offs  – working from home is becoming more and more common. For business owners who spend a good portion of their time at their residence, they may and can often write off things like their utilities and  internet service.  Individuals  who are tempted to do so however, may  pile on unnecessary deductions in order to receive a hefty  tax return.  Eagle eyed IRS agents  will spot such discrepancies however, and in due time, you may find yourself undergoing an intensive tax audit.

As the above list indicates it is prudent to retain receipts and  relevant forms on the in case  the IRS pays you a visit. The best course of action is to avoid an audit altogether.  One way to do this it  to   stay on top of your accounts, which  is why outsourcing to a reputable finance firm is in you and your companies best interest, all year round.

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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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READ MORE

• GBC Tax Offers Atlanta Experienced IRS Representation
• Essential Financial Services
• Tax Requirements By State
• Visit the Internal Revenue Service's Website
• GBC Audit Services

Payroll Services : Hiring An Outside Bookkeeper

The Importance of Outsourcing A Bookkeeper

Why Hiring Outside Bookkeepers Assists in House Payroll

Large or small, consumer or industry oriented, reputable businesses must report their income to the appropriate government body during the appropriate time frames.  Problem is, even a moderate sized company could find itself in the cross hairs of an Internal Revenue  Service audit.

There are numerous things that could give the IRS reason to consider an intensive audit, but chief among  them remains issues found within payroll.

Why is this the case?

All departments can find themselves backlogged and inundated with time consumptive projects. Problems arise however, when overworked, over stressed  employees begin to overlook imperative details, especially in the realm of payroll tax filing and reporting.  Clerical errors and mistakes in this realm  happen under these types of circumstances, which greatly increase your company's risk for governmental intrusion and investigation.

Other common issues that can create a lax or problematic environment include:

Mismanagement in the Finance Dept – employees are the backbone of commerce but bad business practices, or simply hiring the wrong kind of candidates, can place you at risk for a tax audit.  When business is mishandled at the employee level, an atmosphere of apathy and lowered morale can ensue as well.  Keeping workers happy is paramount to success, and can be just as important as  hiring individuals with  knowledge and skill to effectively run the office. Still, even happy seasoned  accountants can make the kind of  recording mistake that cause IRS agents to knock on your door.

Increased Work Loads – Smaller businesses are especially guilty of the practice of heaping too much work onto one person.  In an effort to save money however, this could cost you, especially if the employee in question is keeping you or out hot water with the IRS.  Unfortunately, things like hiring freezes and budget constraints can make it near impossible to remedy  the situation.

Bad record keeping habits – Everyone gets into the occasional rut and accountants are no exception to the rule.  Problem is relying on ritual or lackadaisical bookkeeping may prove disastrous when it comes time for detailed audits.  This concern is  particularly troubling since established patterns means one may not be looking into new and innovative ways to solve problems.  Coupled with the fact that the IRS changes their recommendations and filing requirements quite frequently, it pays to remain forward thinking in regard to payroll management and record keeping.

Probable Embezzlement – no business wants to entertain the thought that someone within their fold could willingly deceive them or do them harm, yet disgruntled or  aggrieved employees can and often will bite the hands that feed them.  In an uncertain world, it is often times best to have another pair of eyes perusing over  your financial documents and files to ensure not only their accuracy, but authenticity.

GBC Tax Services of Atlanta has a number of trustworthy well vetted CPA’s on staff with the expertise needed to find potential problems before they become a force too big to reckoned with.

At GBC ,we pride ourselves on being  problem solvers, looking at tasks with an eye towards finding solutions and eradicating the kind of imbalances that get companies flagged for IRS audits.

Indeed, outsourcing payroll audits may be one of the best ways to ensure your finances remain impeccable enough to stand up to IRS scrutiny.   If you are still uncertain about your prospects in this arena, do a bit of intensive research and speak with someone in the know regarding the services of reputable accounting firms  like GBC Taxes of Atlanta.  Once satisfied, you should take that all important step of protecting you and your hard earned investments, today and well into the future.

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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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READ MORE

• GBC Tax Offers Atlanta Experienced IRS Representation
• Essential Financial Services
• Tax Requirements By State
• Visit the Internal Revenue Service's Website
• GBC Audit Services

IRS Determination : You Have The Right To Contest

Appealing an IRS Determination

Appealing an IRS Determination – Is It Possible?

You've just undergone an exhaustive IRS audit and your worst fears were realized. You owe money. A lot of it. Money you don't even have.  You are now left with plenty of questions  yet not a ton of options.  At this juncture, you may feel inclined to toss your hands in the air, curl into the fetal position and drown out the world, but don't give up just yet.

Businesses, no matter how large or small, have the right to contest IRS determination in tax court.  What does this mean? It means that the IRS decision isn't necessarily final. If you are able to prove your case in court, you could manage to reduce the fees or eradicate them altogether.

Great!  How Do We Start?

How, when and where you present your case is ascertained by the IRS ruling itself, but first and foremost:

Make Sure  Your Appeal is Valid – To  have your  case effectively heard, it must first fall under the rule of law, tax law in particular.  When it comes to  a tax appeal for example, you can't claim an conscientious objection or exemptions based on moral or religious grounds.   After determining  if your case falls within legal parameters, you can either file a claim using tax form 12203 (for cases where a determination of of $25, 000 or lower was made) and presenting it to the tax courts. If the determination was higher than $25,000 dollars, you will need to  file a formal protest, which is a bit more involved.  After all pertinent information if received, the courts will schedule a conference where they'll address your concerns  and assess them for validity.

Know What You Are in For – Disputing a tax assessment is not the same as appealing a civil or criminal case.  One major difference is that you won't see the individual who audited you at this point.  Rather,  an appeals officers will be assigned  to your case and the process will begin with them. Because the appeals officer is unfamiliar with your case and  may not have ties with the agent who audited you,  you could feel as if you'd have a better chance at getting heard and resolving the matter  to your satisfaction.

File Within the Allotted Time Limits – bear in mind that there is a  tiny window of time to appeal the decision, usually  30 days.  If you don't file your appeal  within the scheduled frame, you will lose the right to have your case heard.    The process is informal and can be done via letter correspondence or in face to face meetings. If you fear  you won't have time to address the case, you should consider having someone serve as  representative in your stead.

Hire a Knowledgeable  Representative – In cases where you wish to appeal an IRS ruling, it is best to hire a qualified CPA, Tax Attorney or  Agent  to go over your case and accompany you to hearings.  Someone ill equipped for the job  could end up costing you  your one chance to remove a heavy debt load from your shoulders.  If you decide to let someone speak on your behalf, be sure they have the expertise and know how to present your case well.

At the need of the day, most Americans are unaware that they can  even dispute an IRS audit ruling. If you have been audited recently, now would be to perfect time to claim your right to an appeal.  A step in the right direction would be to hire a expert CPA, such as the ones found at  GBC Income Tax Services of Atlanta.  Don't put your future as risk by doing nothing...start the appeals process and see what you can do to reverse  the decision and  get your business back on the fast track.

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READ MORE

• About GBC Services
• GBC Audit Services Website
• Visit the Internal Revenue Service's Website
• GBC Tax Income Atlanta Office
• Chartered Global Management Accountant (CGMA)
  American Institute of Certified Public Accountants (AICPA)
  GBC Services LLC, Tax Accounting Services for Atlanta GA
  GBC Press Release : MORE

Facing the Dreaded Audit By The IRS

The Dreaded IRS Audit - What Actions You Should Take

The IRS has targeted you and your company for a comprehensive audit. 

You've done everything  humanly possible to avoid it, but  your worst fears have been realized. Before you  fling  yourself headlong into panic mode and start checking out real estate in Tahiti, relax. An audit  isn't necessarily the end of the world, especially if you know what to do  in preparation for one.

Great – I am Being Audited – Now What?

An audit can be particularly stressful for  both employer and employees alike.  While the business  owner worries about potentially  being fined, paying exorbitant fees or worse, going to jail, dependent  workers wonder if they could lose their primary source of income should the business go under.
With so much at stake, corporation undergoing a tax audit will need to ensure they have everything on hand to make the process go as smooth as possible.

Gather all pertinent file, records  and documents –this is  the most important aspect of preparedness that cannot be stressed enough. The inability to a locate or present documents  can provide IRS agents with enough fodder to fine   you or claim criminal intent on your part.   Indeed, companies that are able to provide relevant records and books are least likely to face serious consequence after an exhaustive audit.

Do Your Home work – A little research can go a long way in not only helping you feel more secure, but in educating you on what you will need throughout the IRS auditing process. One thing that may surprise you is that the IRS aren't the big evil boogeymen they are made out to be, in fact, they   will and often do consider the fact that employees are prone to human error.  At the end of the day, only a small handful of audits result in serious  citations, fines or arrests.    With that in mind, remember that  they will and often will pursue anything they think to be grossly out to of proportion with the facts presented.

Take a Deep Breathe and – Relax! – The last thing you want to do is raise suspicions that  you have something to hide by acting overly worried. That is not to say pretend everything is A-Okay—just don't get super worked up. Stressing over the matter won't help things anyway, as the best way to ensure you  are going to “beat the system”   is to  do everything in your power  to legally increase the odds of a positive outcome. Seeking the advice of  a well respected accounting firm like GBC Tax Services of Atlanta is one way to  do this.  By outsourcing, you can  go over what needs to be done prior to the IRS agency visit. You  will also be better equipped to ferret out potential problem and solutions before the big day arrives.  In any case, it is always wise to go with  proven experts in the field of accounting  so you know you  you'll be ready when the Tax man comes a-calling.

Once you’ve decided on an expert CPA,  you can have them represent you or be a  part of the process alongside you. In either case, it makes more sense to have a proven and trusted CPA at your side who will help you protect everything you're carefully built. They can also  help you  if you don't like the IRS determination, by taking your case to  tax court on appeal.

But no matter the outcome, it literally pays to do your homework.  Avoid  common business  pitfalls that  lead to  a  negative result after Internal Revenue evaluation by being  proactive on your own behalf. It is the only way to win at life as well as beat tax audits.

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READ MORE

• About GBC Services
• GBC Audit Services Website
• Visit the Internal Revenue Service's Website
• GBC Tax Income Atlanta Office
• Chartered Global Management Accountant (CGMA)
  American Institute of Certified Public Accountants (AICPA)
  GBC Services LLC, Tax Accounting Services for Atlanta GA
  GBC Press Release : MORE

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For All Your Accounting Needs Call GBC 678-366-9232

What Home Businesses Need to Know About Auditing

Learn What You Can Do To Beat An IRS Audit

The factors that contribute to home business complications primarily concern keeping adequate, substantial records that indicate the influx of money alongside reasonable deductions that won't get you flagged for an audit.

Operating a  small business  can be  productive and exhilarating, but such proprietors  face a bevy of  issues that are unique to  “mom and pop” establishments. Add to this the fact that the company is operating from your home and things get even trickier. 

For instance, writing off  an off-site office as a business expense is a no brainer, as  one can establish the need to pay rent,  electricity, water and any other related  employee housing disbursement.  When it comes to  a home office however, you have to detail, with all due precision, the increments in which one uses things such as  supplies, water, lights,  and even the internet for business related purposes.  Some  may calculate erroneously and in  some cases fraudulently,  so more often than not, writing such things off can and/or  may  lead to an IRS audit.

How Would a Home Business Get Pinged for Audit?

The IRS considers and evaluates a home business  as it would any other,  while being aware of the limitations of such companies.  In other words, the criteria may remain the same but not the methodology  to factor in potential abuses or mistakes in reporting.

DIF Scoring  Rings Audit Bells   –  if there are enough red flags on your tax return, you could trigger what is known as a DIF  (Discriminatory Index Function) flag.  The DIF is a mathematical measurement that weighs  the possibility of audit based on certain income tax filing characteristics. In other words, if too much is out of whack on the form, it will trigger a high enough DIF to provoke an investigation.  This process is utilizes for all types of businesses, but can be problematic for home businesses, where certain nuances, like business expenses and home office space calculations, can be hard to assess properly.  With this being the case, even a mindful home business owner can  land themselves in IRS hot water.

Regular and Exclusive – Another issue, as discussed previously, is duly calculating the home office space, its requirements and  uses.  Getting this precisely right is important, as the IRS determines home office use in its tax audit assessments.  The evaluation  examines how  “regular” and “exclusive” office use is in relation to  home versus business life.  In order for a home office to  establish “office/ work viability” the IRS has to look at how regularly the room is used for business and how exclusively it is used for said business purposes.  For this reason, there are things one can indicate on  one's tax form that could give an agent the notion to investigate the in home set up. This would involve  making sure the small business owner  observed governmental and tax guidelines, like dedicating the space for work alone e.g. no watching Netflix and  having movie nights in the home office.

Examination of 1099 and W2's – a simple yet effective way that IRS agents can assess probable issues is by comparing  1099's or  w2's to the tax documents  themselves. This easy method of matching will tell an agent right away if there are any pertinent discrepancies in income reporting.

Beat the audit by looking for deductions – If you find yourself in the cross hairs of an IRS audit, it may very well pay to look for deductions wherever you can.  Many home business owners do  not now  for instance that they can write off things like utilities  and even business related phones calls.  If you have  relevant records on hand, they may be  able to be used to offset any taxes the IRS may calculate against you.

Locate  a Reputable  CPA – strong credentials  matter, so if your small home business is facing IRS scrutiny, contact a company like GBC Income Tax Service of Atlanta  and learn what you can do to beat the odds and increase your chances of a positive outcome.

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READ MORE

• About GBC Services
• GBC Audit Services Website
• Visit the Internal Revenue Service's Website
• GBC Tax Income Atlanta Office
• Chartered Global Management Accountant (CGMA)
  American Institute of Certified Public Accountants (AICPA)
  GBC Services LLC, Tax Accounting Services for Atlanta GA
  GBC Press Release : MORE