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Audits Archives

The possible effects of an audit on a small business

More often than not, experiences with the federal government’s tax collecting arm are not pleasant; either because the IRS believes that a small business owner is cheating Uncle Sam out of money, or business owners feel as if they are unfairly singled out because of their success.

You receive an audit notice: what could be the reason?

Getting an audit notice can be extremely stressful, especially if that audit could potentially result in some sort of liability. To the best of your knowledge, you and your accountant did everything accurately so you worry about why the IRS has asked for an audit.

Mistakes that could increase audit exposure

Minnesota residents may believe that the IRS can only audit their returns for three years after they are filed. While this is true in many cases, there are also scenarios in which the IRS has six years to audit a return. For instance, if an individual understates his or her income by more than 25 percent, the government has six years to audit that return.

'Business as usual' in government; private sector confusion

The start of the new White House administration has been interesting to watch, to say the least. Many pundits, including here in Minnesota and Wisconsin, point to the activity with a suggestion that it is unprecedented. The reality is that much of what is happening is not unusual. Every new administration brings with it change. The key questions many might be asking, though, are whether the dust will settle and how long it will take.

In the face of IRS unknowns, focus on fundamentals

In our post of Jan. 19, we noted how the IRS indicates that it will continue relying on business whistleblowers in tax collection efforts. The agency's recent report to Congress hails the fact that such tips resulted in collections of over $3 billion since 2007. Payouts to the whistleblowers were in the millions by comparison.

New IRS rules could mean more partnership audits in future

Forewarned is forearmed goes the old proverb. Advance knowledge of potential holes in the road makes it easier to avoid hitting them. That's true for driving, especially here in Minnesota and Wisconsin as the seasons shift from winter to spring. The wisdom also applies to tax issues. Knowing the possible pitfalls associated the IRS tax code makes it easier to avoid disputes over incorrectly filed returns or the resulting audits.

Tips that may help ward off an audit

We are well into summer. By some measures it's about half over. At the start of the season, many parents of teenagers from Minneapolis-St. Paul to across the river in Wisconsin likely were pressing their offspring to go out and get jobs. In some cases, especially if the parents have their own businesses, jobs were created for sons or daughters.

What are the chances of an IRS audit and should I worry?

Most people don't cheat on their taxes. The forms aren't all that easy to comprehend and fill out, even if you are a certified public accountant, so someone in Minnesota might innocently make a mistake in calculations or reporting. None of that means much, however, if you receive notification from the IRS that you are being audited.

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