Georgia entrepreneurs may be interested to learn that one business owner came out of an audit with more than $100,000 from the IRS. An audit does not necessarily mean that the IRS will find something in the government's favor. In this particular case, the man had hired a new tax team and learned that he could have been entitled to refunds of approximately $102,000 from the IRS over the past few years. When he filed amended returns, the IRS responded with an audit.
Due to IRS budget cuts, it may seem logical for Georgia residents to believe that audit rates are lower. In 2011, those who made more than $1 million had a one in eight chance of being audited. Today, someone who makes more than $1 million has a one in 13 chance of being audited. However, the audits that are conducted today are being conducted at an expedited rate of speed.
Georgia taxpayers may be interested in learning more about critical errors that could place them in a compromising position with the IRS. Generally speaking, the IRS has up to three years to audit a taxpayer after a return is filed. If the taxpayer underreports their income by at least 25 percent, the IRS may extend the audit period to six years. The same rule applies to taxpayers who have understated at least $5,000 in foreign income.
Georgia taxpayers who are concerned about an IRS audit should not be too worried about the possibility. The incidence of audits, which are rare occurrences in the first place, has been dropping over the past few years. Of the ones that do occur, most are done through the mail and not face-to-face with an IRS agent. Cuts to the IRS budget over the last few years has resulted in staff cuts, and this means there are fewer agents to audit and fewer people getting audited.
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.
In 2013, the IRS audited roughly 1 percent of all tax federal tax returns. However, there are specific factors that could increase the odds that a specific return is audited. For instance, those who made more than $1 million a year are audited at a rate of 11 percent. In comparison, those who made less than $200,000 a year were audited at a rate of .88 percent.
Some companies in Georgia may have experience with IRS business audits. Although these audits have the potential to be stressful experiences for business owners, it may be possible to mitigate their operational impact through careful preparation and planning.
If you have been notified by the Internal Revenue Service about unpaid tax liabilities, we may be able to help you find the solution you need to settle those debts. Serving clients throughout the state of Georgia, we can suggest a variety of options including an offer in compromise in which we negotiate with the IRS to accept a partial settlement..
Owners of small businesses in Georgia may be interested in some information on what the Internal Revenue Service is trying to find when conducting a business tax audit. Depending on what its analysis shows, there could be serious issues for the business owner.
The Internal Revenue Service may generally audit a return no more than six years after it was first filed. In most cases, the IRS will try to audit all returns no more than two years after they are filed. While the statute of limitations is three years in most cases, the IRS can go back up to six years if it finds a substantial error on a tax return.