I'm being audited for the third year in a row. Each year my return has held water. The costs are rising, how can I stop this?
Considering that each previous year the audits yielded no fines of any kind, A) what payment are they suggesting I didn't pay fast enough? - B) why might this be happening to me? - and C) how do I sufficiently demonstrate the accuracy of my returns to the IRS given that they haven't previously fined me during their audits, yet somehow I'm being audited for an excessive number of consecutive years.
4 attorney answers
Being audited for three successive years is out of the ordinary. Are you being audited for income tax purposes or for payroll/employment tax purposes? I would recommend you consult with a tax attorney who can review your returns and the correspondence from the audits to see if a reason can be discerned. That attorney can also submit a Freedom of Information Act request to the IRS for your entire file, which should include the notes of any employee involved with your examination; that may provide better explanation.
As far as late payments go, you didn't say with more specificity what the payments were for, however, if they were estimated payments, you should check with your accountant to make sure that they're being paid timely. If they are payroll/employment taxes, you need to (a) confirm how often you're required to make those payments under IRS regulations, and (b) confirm that those payments are being submitted on a timely basis.
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This is interesting and odd for a small business. Some of my larger clients are audited almost every year. Usually, a business tax audit is better handled by an experienced tax attorney, in conjunction with your accountant. I really think you need a tax lawyer for this.
Also, are you being audited by State tax authorities as well?
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The IRS has had a policy that if someone is audited twice, and no tax was due, they will not audit again. Perhaps a tax attorney can bring this to the attention of the right people at the IRS.
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Consult a tax attorney immediately to get information on what to do to get this to stop.
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