Tax Audit Horror Stories
By Justin Moyer, North Carolina Tax Controversy Attorney with Murray Moyer, PLLC
Bad Bookkeeping Can Lead to Tax Audit Horror Stories
Some small business owners attempt to cut costs by either maintaining their own books or using some type of online service provider. This leads to mistakes that could result in failing to pay the appropriate tax liability. An audit may ensue that would increase the amount owed to as much as double the original amount. Hiring a competent, organized bookkeeper that pays attention to the details of your business is worth every penny.
IRS Makes Mistakes Too
The IRS can make its own mistakes that lead to tax audit horror stories. One small business owner was sent a six-figure personal tax liability bill because the IRS auditor miscategorized a capital infusion as income. This mistake cost thousands of dollars in legal fees to correct and took years for the mistake to come to light. Having a tax controversy attorney available to review audit info from the very beginning can save time and money over the course of the audit.
IRS Agents Get Annoyed
IRS agents deal with a lot of disgruntled taxpayers. From time to time, agents decide that they really do not care for someone on the receiving end of one of their audits. This can make for an extremely tense, stressful situation. One couple became so discouraged by the rudeness of the agent, they reached out to TAS (Taxpayer Advocate Service) and unfortunately, this angered the agent even more. The agent dragged out the audit and made the entire experience uncomfortable for all. Having a team that will work hard to keep the peace can make the audit process much easier. Experienced tax controversy attorneys understand the personality element involved and can run interference to help avoid unnecessary conflict and tension. Hire a tax controversy attorney who can help you avoid a tax audit horror story.
Clerical Errors Cause Long Hours to Clarify
Inserting the wrong date, listing employees as independent contractors or leaving off a digit on the liability column can result in long hours of back-and-forth communications. Using an experienced and detailed tax preparer is key to avoiding clerical errors that result in timely and costly mistakes.
Sticking Your Head in the Sand
One of the biggest mistakes taxpayers facing an audit can do is to pretend that it is not happening. Failing to respond to communication from a tax authority will only result in trouble. The IRS will not stop auditing you because you fail to respond. As soon as you receive the first communication, contact the experienced tax controversy attorneys at Murray Moyer, PLLC for assistance. They can help make sure that all deadlines are met with thorough responses.
How to Avoid Your Own Tax Audit Horror Story
To avoid these tax audit horror stories start by hiring a competent and thorough bookkeeper. Consistent, accurate records provide an easy to navigate paper trail that helps auditors find what they need so they can end the audit quickly.
Next, make sure your tax preparer and bookkeeper work together cohesively. Tax season is a busy time. At Murray Moyer, PLLC our staff includes bookkeepers who maintain your business’ books throughout the year, as well as experienced tax preparers who are ready to step in to create and file your tax returns.
Read more about avoiding a tax audit by checking out our post Top 8 Tax Audit Triggers.
For more information on services provided at Murray Moyer, PLLC that include bookkeeping, tax preparation and legal services involving tax controversy and audit defense, contact us today at (919) 846-6779 for a consultation.