Georgia business owners may be interested in some information about different types of strategies they might employ to be successful during a tax audit. Due to the importance of doing well during these audits, it is crucial that the taxpayer do everything they can to avoid further penalties.
When a small business owner is chosen for a tax audit, they may have fears that they incorrectly filed taxes or misreported income. One expert recommends a number of specific strategies for dealing with an audit in order to come out on top. The first is to dispute the IRS’s claims that the small business is just a hobby. Because hobbies are given fewer deductions than businesses, it is important to disprove this argument. The two major ways to do this are to show that there is a strategy in place for making the business profitable and by demonstrating past profitability.
Another important strategy during audit defense is to use alternative ways to prove deductions if the proper receipts are not available. This can be done by testimony from another party or even the use of third-party sources like Google Maps to prove mileage. The third tax audit strategy is to bring up any deductions that may have been missed when taxes were filed the first time around. There are many deductions, such as business gifts, that owners often miss when filing taxes.
It may also be important to seek help from a professional. IRS tax defense is complex, and having a professional represent the taxpayer during the audit may help a business owner avoid unnecessary mistakes. An attorney with experience in tax disputes may be able to assist a small business owner with their audit defense.