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Avoiding or preparing for audits

For Georgia businesses, a tax audit can be a difficult experience. However, there are some ways that a company might try to avoid attracting undue attention from tax authorities.

For example, if the company is doing its own taxes, it might be beneficial to use computer processes to double-check the accuracy of the document. Certain tax preparation programs offer internal checks that may help avoid errors in calculation. In some cases, these programs might offer the added benefit of finding additional deductions. In addition, it may be important to avoid certain documents that might attract addition attention from auditors. Using forms such as the Schedule C, Profit document might cause auditors to conduct additional reviews. It may also be helpful to attach proof to any larger deductions the business claims. For example, a business that is writing off damages and repairs from a natural disaster might include insurance documentation, photos and receipts regarding repairs with the tax report.

Despite those actions, an audit may still occur. Under these circumstances, a business might be able to take a few steps to make the proceeding go more smoothly. For example, it may be important to be ready and take the necessary time to gather the documentation that the auditor might need. However, it is also important not to be over enthusiastic about making the process easier. Businesses should not provide any extra information that was not requested by the auditor.

While these tips may help, an audit can still be complicated by a number of factors. Businesses that may be faced with an audit might benefit from discussing their situation with a lawyer who is familiar with tax law.

Source: Findlaw, "What to Do if the IRS Audits You", November 19, 2014

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