Business

6 Golden Rules For Dealing WIth A Tax Investigation

It doesn’t matter how squeaky clean you are or how well you run your business. If the IRS comes knocking, it can put the fear of God into the most experienced company owner. After all, there is an awful lot at stake – you could face fines, business closure, or even end up in prison.

While the chances of being involved in an IRS investigation are slim, they do happen. So, if you have made a mistake on your return or just face a random selection for an audit, there are a few things you should do. Wit this in mind; we’re going to take a look at some golden rules for dealing with a tax inspection.

Remain calm

First of all, it’s vital to stay calm. When the IRS contact you, it is, most likely, down to an error on your company tax return. However, if you have been misleading the IRS on purpose, there could be significant consequences. There is no getting around it, though, and a clear head will be able to deal with the issues ahead a lot better than one pumped full of anxiety.

Be honest

Always be honest with the IRS. Everyone makes mistakes – and the IRS appreciate that fact. However, they are also experts at sniffing out dishonesty. The results for you and your business could be catastrophic if you have been lying. Honesty is a great trait for business owners – especially when it comes to legal matters such as taxes!

Hire an expert

Once you know that the IRS is investigating you, it’s wise to get some advice from a professional. You could speak to a local tax specialist or a tax attorney. According to tax experts MCC4Tax, it is vital to move fast and get someone on your side as soon as possible. Tax can be a complicated, and the IRS can often put you under a lot of pressure. Without help, it’s easy to make a mistake or say something wrong, leaving you open to accusations of criminal activity.

Don’t talk too much

When the IRS investigates a tax problem, they will usually ask for evidence of that particular problem. For example, they might want to see all your receipts for the year, or ask for invoices from freelance staff you have been using. Make sure you only send them what they ask for – or you could incriminate yourself for something else needlessly.

Be prepared

Always be ready for any investigation meeting. If you don’t know the answers to the IRS’s questions, they could see this as obstruction. You will get an increase in fines and can expect punishment for a lack of cooperation.

Never hide the evidence

If your records lack accuracy, don’t try and cover things up. Any gaps will only make the IRS suspect you are purposefully hiding info. Even if you aren’t, you can expect a rough ride for inaccuracies and missing documents.

IRS investigations can be incredibly stressful – even when you have nothing to hide. They can go deep into your financial history and may question you on facts that are long forgotten. There is no getting around it – an investigation can be devastating. The only way to protect yourself is by keeping accurate, perfect financial records for your business.

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elliott

elliott

Ive been blogging now for 5 years on various sites for the love of knowledge share. I decided to start my own blog a few years back to share everything from tech to business news. Follow me on twitter for more.