The Internal Revenue Service (IRS) selects a number of business tax returns for examination each year to determine whether their tax reporting is accurate. When business owners receive an IRS letter of examination, it does not necessarily mean that there has been a tax accounting error. It does, however, mean the business owner could be quite busy handling the IRS examination effort unless they have adequate representation. An IRS examination may involve:
- Examination by mail or in-person interview
- A review of your taxpayer's records over several years
- Recorded and documented interviews with IRS Tax Agents
At Fernandez-Bergnes & Associates our bilingual team of licensed and certified public accountants can represent you before the IRS; a local Miami CPA firm with experience is the best choice when you need representation.
In the past decade, the IRS has increased their examination and audit activity significantly and there's no doubt that an IRS audit can be a rather stressful event for a business owner. Luckily, our team of CPAs knows how to organize your returns and show your position to the best advantage. We'll work with you before your scheduled audit interview to clarify any areas that may seem questionable. We will also help you show the auditor the information requested in a logical, factual way and get the examination completed quickly.
What to Expect if you Receive an IRS Examination Letter
Typically, the length of the examination process will take anywhere from a few weeks to a few months. The IRS will ask for detailed documentation, including:
- Your business ledgers and journals
- Business bank statements
- Pension and investment plan statements
- Tax records going back several years
The IRS will have reviewed your tax returns in advance and they'll have in mind what they want to focus on. The purpose of their examination and what they're focusing on won't be disclosed to you, however, so you'll be asked a lot of questions about the start of your business, the nature of individual transactions, and your customer base and partnerships.
Business owners with established, confident, and experienced CPA firms typically have a far shorter, far less painful IRS examination process. Don't wait until your firm is selected for an IRS examination. Get your tax accounting handled right the first time.