Christian CPA: IRS Audit 101
Christian CPA: IRS Audit 101
Preparation, Preparation, Preparation
Tax 5 Tips to Ensure a Successful IRS Audit Experience
Understanding the role and position of IRS personnel is essential. Understanding that the IRS’s first and predominant goal is the successful collection of taxes due if a key first step in understanding the process and working to ensure that your best financial and tax interests are not their predominant watchword. This having a CPA/tax advocate who is both familiar with tax law, collection procedures and your particular situation are critical. Frequently, I have seen situations where the IRS will look to collect income tax monies that are due, without consideration, to legal tax laws and elections that might dramatically affect your income tax bill. Thus having an advocate, who is familiar with tax law, and its proceedings, is your beast step towards ensuring that you are both legally and financially protected.
Choosing to go it alone, without wise and judicious counsel, are a recipe for financial disaster as most certainly your best financial interests will not be considered without the just and legal consult of a CPA/Certified Public Accountant as your CPA. Having served as a CPA in Metro Atlanta and beyond for almost thirty years our files are full to examples of successful negotiations with the IRS. All of the tenants below were essential components of that experience.
Tax Five Tips to Ensure a Successful IRS Audit Experience
1. Retain a CPA: Assigning the responsibility over to a well-qualified power of attorney to a Certified Public Accountant. You will want to find a CPA who is well versed in handling sensitive tax issues such as an IRS audit, back taxes, substantive unpaid and/or un-filed tax returns, Offer in Compromise, tax elections, liens, and levies. Signing a Power of Attorney/IRS Form 2848 giving your CPA the power and ability to act on your behalf, is the first step in this process. However, it is always prudent to never issue checks payable to your CPA for taxes owed. Instead these monies should be made payable to the IRS and then forwarded to the CPA for inclusion with required tax correspondence. For more information visit http://www.hiscpa.com/article8.html
2. Work with Your CPA To have Good Documentation: Tax Law has long commanded that taxpayers keep documentation for business receipts, expenditures and itemized expenses. Essentially your documentation should tell a story proving the expenditures and recorded itemizations so that an independent reviewer would be able to quickly ascertain the correctness and validity of items recorded. Good documentation not only makes your CPA’s job easier but also allows for the quick and successful conclusion of an IRS audit. Frequently it is often prudent to “pre-explain” any unusual item when filing a return by attaching to the return perhaps both an explanation of an item and the corresponding receipt to determine validity and correctness. For more information visit http://www.hiscpa.com/business-expenses.html
3. Follow the CPA’s Lead: Frequently, when left to our own devise we are apt to make decisions and to choose a direction that is not in our best interest. Thus, when you retain a CPA following their lead is your best chance for success. To this end the best initial advice is not listen to those who are not well versed in tax matters. Thus, listening to anyone who is not a CPA is not only disorientating but also a recipe for disaster. Debating unduly with a well-versed and experienced CPA is akin to arguing with your physician after he has made a diagnosis based upon a series of tests. Following the lead of your CPA is your best defense to ensuring that your IRS experience is as pleasant as possible. Unduly requiring your CPA to re-advise, instruct and debate a sensitive tax issue will result in both higher tax representation fees and undue delay in resolving your tax representation issues. For more information visit http://www.hiscpa.com/parttime-cfo.html
4. Working With Your CPA: Just as the difference often in a boxing match is the sheer will of a participant to stand tall in the face of unyielding adversity, taking punch after punch, but continues to fight the good fight. When addressing sensitive tax issues, handling IRS audits, back taxes, tax liens or levies or an Offer in Compromise it is essential to know when to say when. Often success is just beyond our reach and it is for only those who continue to seek after the goal when all appears helpless. Giving up at a critical juncture wastes all the time and fees beforehand and ensures that even more fines and penalties will be assessed and that the IRS collection efforts resumed and heightened. For more information visit http://www.hiscpa.com/top-ten.html
5. Planning with your CPA: An ounce of medicine is worth a pound of cure. Nowhere is this more true that in addressing your tax issues before they become problematic. Having a working knowledge of tax law, hiring a payroll service and following the lead of your CPA is essential to sound financial and tax management. Tax law since the 1940’s has required taxpayers to pay their taxes as they go to avoid assessment of penalties and interest. Making sure that your payroll withholdings are sufficient if you are a C or an S Corporation, that your estimated tax payments if you are an LLC, LLP, Partnership or Proprietorship is essential to avoiding extra fees and penalties. Also a periodic review of your entity choice, your retirement plan choices and your accounting procedures is a key ingredient to ensuring that your company elections, processes and procedures are both up to date and maximized for both tax and operational efficiency. For more information visit http://www.hiscpa.com/year-end-tax-planning.html
John Dillard is a Christian Speaker/Author and Certified Public Accountant (All Rights Reserved). To See how he takes Christ along with him to work visit http://www.hiscpa.com/ (An Atlanta CPA firm) We advise clients on: IRS representation, Offer in Compromise, Tax Problems, Incorporation in Georgia, Corporate and Personal Income Tax Returns, Part-time CFO, Virtual Controller, Business Planning, Offer in Compromise, Back Taxes, Business Acquisition/Sales, Forensic Accounting, Business Valuations and Bookkeeping.
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