The National Association for the Self Employed reports that the Internal Revenue Service will begin reviewing the tax records of 5,000-6,000 randomly chosen businesses beginning this November (2009). The program will be completed over the course of three years on both for profit and non-profit employers.
The NASE makes the following suggestions to make sure your company is ready:
- Since these audits will be unfolding over a three-year period and audits typically cover a period of three tax (calendar) years, initiating an internal review of employment taxes compliance now is the first step to consider.
- Identify an internal point person to manage the audit preparation process. Notices of audits can simply be addressed to the company at the address used for filing recent tax returns. If not directed to an informed contact person such notices may not be timely or completely responded to.
- Identify and budget for internal and other resources to gather, organize and analyze such records and provide appropriate representation.
- Engage experienced employment tax and audit experts before having an initial audit meeting with the IRS. Legal counsel should generally be able to provide assistance protected by the attorney-client privilege. Whether such expertise is engaged to either visibly represent the employer or simply to advise the employer in the background, it is important to engage these services early. Early involvement usually lends to a more efficient audit process.
- Do not rush into an audit schedule. Do not commit to a date before the adequate resources are in place and there has been an opportunity to gather, review and analyze all initially requested documents. It is important for the employer to have an overview of the company's strengths and weaknesses.
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