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.
The tax team had recommended a number of changes that would result in savings. One was changing the company’s filing status to that of an Subchapter S corporation to save on self-employment taxes. Another was using cost segregation to change the way items owned by the business were depreciated. For example, the carpet in a building owned by his business is allowed to be depreciated over a shorter period of time than the building itself.
The man also learned he could write off mileage when he used his car for business. It is possible to go back and amend three years of tax returns, and the mileage was actually the change that triggered the IRS audit request. The audit required the man to submit additional documentation, but in the end, the IRS found that he could claim back even more from mileage than he had realized.
An individual who is facing an IRS tax audit either for personal filings or for a business may wish to consult an attorney who has experience in federal income tax laws and regulations. The attorney may be able to represent the individual both during the audit and, in the event that any subsequent appeals are required, in future Tax Court proceedings.