Every year, a number of Georgia residents and companies receive letters from the Internal Revenue Service informing them that their tax returns are being audited. Though the prospect of an audit can be stressful, many people can resolve an audit easily by providing the IRS with the documentation that they need. If a taxpayer owns multiple businesses or lacks appropriate documentation to prove income and deductions, an IRS audit could be prolonged.
The chances of being audited by the IRS are low for most people, but there are some circumstances that can make audits more likely. If a taxpayer includes information on the tax form that does not match information the IRS received from other parties, the taxpayer is likely to be audited. Complex business transactions and deductions that are unusually large compared to a person’s income can also lead to audits.
If the IRS has questions about business income, the agency usually audits the company’s tax return rather than the personal tax return of a business owner. However, when the IRS does audit a business owner’s tax return, the audit can take a very long time. To correct a business owner’s tax return, it may be necessary for the IRS to audit the company’s tax return as well as all of the tax returns of other business owners.
When a person owns multiple businesses and has many different types of investments, dealing with the IRS could be very complicated. A tax law attorney can often help clients prepare documentation to show to the IRS during a tax audit.