01/31/2023

Five Small Business Tax Audit Triggers

Here's what to do if the IRS comes calling

Disclaimer: This article is for informational purposes only. It should not be considered legal or financial advice. You should consult with an attorney or other financial professional to determine what may be best for your individual needs.

Although most small business returns filed every year do not get audited, the Internal Revenue Service (IRS) is certainly becoming more active. For instance, in November 2020, the IRS announced it would ramp up audits of small businesses by 50 percent in 2021. Then, in August 2022, Congress passed the Inflation Reduction Act, including $80 billion in IRS funding, with approximately $45 billion going toward enforcement — conducted by at least some of those 87,000 new agents the IRS is reportedly hiring.

So, how can you stay out of the IRS's crosshairs? To an extent, there's nothing you can do - as some audits are totally random. However, in most cases, audits result from actions or omissions by the taxpayer — certain of which are more likely to trigger some unwelcome mail from the IRS announcing an audit.

Please select this link to read the complete article from Entrepreneur.