Many companies and business owners in Georgia can begin to develop a sense of complacency about the danger of an IRS audit for their firm, especially given the news that IRS resources have been depleted. There have been cuts to the agency’s budget over the past few years that have meant that the tax authority’s Large Business and Internationa division takes up fewer examinations and makes smaller audit adjustments. Many business owners complete their taxes and rest assured that they do not need to be concerned about an IRS audit.
However, the passage of comprehensive tax reform in December 2017 could lead to significant changes in both the number of audits and the level of care that businesses must take in preparing their records. Many tax professionals are awaiting guidance from the IRS and the Treasury Departments and looking into creative strategies that make use of changes in the law. The tax reforms include reduced tax rates and accelerated expenses, but can also elevate the potential of being selected for an IRS audit.
Because the corporate tax rate cut provided an incentive for income to be delayed until 2018, the IRS may keep an eye on unusual activity that appears to be delaying income to pay a lower rate. Other companies may have managed foreign earnings specifically in anticipation of repatriation in 2018 under the tax reforms. Having a clear legal and financial analysis can help businesses to be better prepared in case they are selected for a corporate audit.
When individuals and companies face an IRS tax audit, they are at a disadvantage when they go it alone. Working with a tax attorney may help a taxpayer reconstruct their documentation, provide evidence of their deductions and substantiate their choices when filing their taxes. A lawyer may be able to provide strong representation that protects a taxpayer’s interests and financial well-being throughout the audit process.