What Triggers an IRS Audit and How IRS Expert can be a Lifesaver

IRS Expert

Last Updated May 27, 2022

Tax season is a tricky time for small businesses. The information if is not aligned with the IRS audits can result in an IRS audit. IRS collects taxes from businesses so that government can pay for the programs and services. IRS is responsible to enforce tax laws and making sure everyone pays their due on time. So the only time when an IRS expert can confirm a tax fraud is through an audit.

So what are the chances of a business being audited? The IRS audit can range from being a simple investigation of an IRS agent visiting your office or home office. A tax return audit does NOT necessarily mean that your business is in trouble. 

However, there’s no harm in the professional guidance of IRS experts even if there is limited to no chance of an audit. Every tax return has a different type of audit. So an IRS expert makes sure to find out the missing gap or wrongly written information from the tax filings


How does IRS Audit work: The Discriminate Function Score 

Many times a tax return consists of irregularities that highlight the business tax filings. IRS has revealed some of the methods they use to audit a business now. 

According to the standard practice, Every tax return is scored as The Discriminate Function Score. The factors affecting the score are not revealed but a higher score is likely to cause an audit. 

It may happen that a tax return is chosen for an audit because something was out of the ordinary. Even large sums of donations can trigger the IRS audit. So the random audits are performed to keep everyone in line. 


How IRS Expert Helps Small Business during Tax Season?

After low exanimation rates in 2021, IRS announced to increase the small business audits. At least by 50 percent. These changes were stimulated due to COVID-19 and changes in the tax laws. 


IRS Audit Small Business


A word of caution is advised to all small businesses ranging from family legacy businesses to online ones that launch during the ongoing pandemic. 

With proper planning and specified guidelines of IRS experts, you can safeguard your small business in the following ways. 


  1. Record Maintenance 

An accurate financial record goes a long way with the IRS. For this, you must have kept all income, deductions, credits, and expenses reports for a clean slate. Having proof to support the documents in your records increases the business’s credibility. 

IRS audit experts also state that to minimize the errors to avoid an audit, the information about tax returns must be adequate. 


  1. Deductions 

Did you just pull a large sum of money for deductions? It’s one of the most common red flags for IRS audit. An unusual itemized deduction is out of the ordinary – something you want to avoid at any cost. 

According to IRS experts, small businesses can claim unique deductions but do so that it fits the bill of the industry niche. You can even enlist a CPA to ensure that you are not at risk of examination for an IRS audit. 


  1. Tax Payments 

Quarterly estimated payments are crucial when you have outstanding credit of $500 throughout the business year. A business failing to make the payments is at risk of IRS audit right away. Or you can face heavy penalties too. 

Tax payments delays (of any sort) are dangerous for small businesses. An experienced tax preparer would know which items are deductible when to make the standard payment and so on. So hiring either an IRS expert or a CPA will work miracles. 


  1. Digital Help 

Bookkeeping and accounting tools have evolved with time too. Mercifully the manual burden that compromised the productivity is long gone. CPAs and IRS experts can prepare the electronic files for your tax returns. 

It’s the best method to prevent any critical errors in the returns. So software like My CPA Dashboard, QuickBooks, or SageAccounting, etc. is a deal-breaker for small businesses in the long run. 


  1. Follow Legal Entity Rules 

Most small businesses are either sole proprietors or partnerships. Given the complexities of large businesses, it’s important to learn what is the audit routine for sole proprietors and partnerships. 

It helps you to understand what to expect in a tax season. If a notice for an IRS audit is served you can always take help from the professional IRS experts to prepare for it. 


How much does IRS Audit Representation Cost? 

IRS audits are time taking and lethal for new startups. Tax experts usually can cost from $49.99 onwards (least wage). If you have a team of tax experts to represent you at audit, at least you know you are not alone in this. They can assist you in audit preparations.  So roughly an expert can cost you $150/hr for audit representation. The more experienced the individual is the higher the cost per hour will be. 


My Count Solutions Have your Back 

Worrying about the IRS audits? My Count Solutions has got you covered with audit representation services at a legit price rate. If you are looking for IRS experts to discuss the audit representation you can count on us without any delay. 

With the help of a tax expert, you can strategically position the business towards growth and increase sales. Also, avoiding the audit radar is easier. Get to know more about us.

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