Acquiring an IRS Audit Protection plan is one of the smartest decisions you can make for your business.
If you have personal or business taxes in arrears, you may be expecting the IRS to come knocking on your door. The very thought can strike fear in the heart of taxpayers. An IRS audit can be a long, tedious experience. It can be intrusive, getting in the way of your personal life or business operations. If you are concerned the government may come looking for you, you may be wondering if it is time to secure IRS audit protection services.
Both individuals and business owners can benefit from having tax experts on their side, but when it comes to protection from IRS audits, you want the best possible team for maximum peace of mind. Make sure your tax team has an exceptional track record and ask if they offer full-coverage services like annual audit protection plans.
So, how do you know when it’s time to seek help with IRS audit protection services? What kind of protection should you put in place? First, let’s take a closer look at what’s at stake — what exactly could you be in for if the IRS decides to audit you or your business?
What will an IRS audit mean?
If you are selected for an IRS audit, you can expect a deep dive into your records. Generally, the IRS will examine tax returns filed within the previous three years. If they discover a substantial error, however, they may include additional years, up to the last six years.
As part of an audit, you will be expected to make certain documentation available, such as proof of income or expenses you have claimed on tax returns.
Examples of the kinds of records the IRS might request include:
- bank statements
- credit card statements
- legal papers
- auto expenses
- travel and entertainment expenses
- dental or medical records
- insurance documents
- canceled checks
- logs or diaries to demonstrate travel and/or income or expenses
- employment documents
- Schedule K-1
Naturally, it’s not always easy to come up with this kind of documentation. Not everyone keeps and organizes records of every expense or source of income, especially years after they have occurred. Even if the information is available, it can take many hours to research and acquire.
All the while you’re searching and collecting the required documentation, you will likely be worried that you won’t be able to find everything they need. You may even be worried that the IRS will ultimately penalize you for what they uncover.
As a result of these unknowns, the thought of being selected for an IRS audit is a common source of stress. This is especially true if you know you have taxes in arrears, as the government is now more likely than ever to come looking for their money. It is no surprise that so many taxpayers use IRS audit protection services to relieve this burden of stress.
Be ready with annual protection
The good news is that the right team of tax experts can help you minimize the likelihood of facing an IRS audit in the first place. Through their deep experience with tax problems, including taxes in arrears, IRS notifications and more, they can often help you head off an IRS audit before it happens.
If you are targeted for an IRS audit, an experienced tax team can defend you in one of two ways:
First, you can have a CPA-licensed tax professional defend you in an IRS audit. While you will still be subjected to the stress of receiving IRS notices and seeking the help of a professional, you will have the comfort of knowing that tax experts are defending your case. The downside to this option is the cost — you can expect to spend $3,500 to $10,000 or more for this service.
Another option is an annual plan that delivers IRS audit protection services. Select tax firms offer this service, adding a small fee to your taxes when they are prepared and filed.
From this point on, any notices from the IRS will be met with a 2848 Power of Attorney, allowing your tax team to deal directly with the IRS on your behalf. Without any additional time or charges, your tax firm will manage communication with the IRS and/or state tax authorities, including any negotiations that need to take place. Even better, if there is a need to meet an agent in person, your tax firm will attend and act on your behalf.
Why seek protection from the IRS now?
In addition to having IRS audit protection services, there is another pressing reason it is important to have the right team of tax experts on your side. Recent legislation has emboldened the IRS, directing more money toward enforcement.
You’ve likely heard of the Inflation Reduction Act, which was passed into law in the summer of 2022. It earmarks approximately $80 billion for the IRS over the next 10 years, with $46 billion intended to strengthen IRS enforcement.
If this sounds ominous, it should. As part of the same Act, the IRS is expected to raise $124 billion through enforcement. This means the government believes there is a wellspring of unpaid taxes to be found and secured. As they plan to enhance digital monitoring and overall enforcement, the IRS will soon have more manpower and better technology to find those in arrears.
In short, the time to get a handle on your tax issues, or at least seek IRS audit protection services is now. The sooner you get ahead of any issues, the greater peace of mind you will have.
The Right Team Matters
Whether you are worried about IRS notifications you’ve received or simply have an uncomfortable feeling about your taxes in arrears — worried the IRS will come looking for you — taking your first steps towards resolution will help you feel more in control.
Naturally, when you consider all that’s at stake — your time, financial well-being and peace of mind — it’s easy to see how important it is to secure the right team for your taxes. Now that the IRS plans to increase enforcement, it is more important than ever to take every advantage you can.
The right team will be experienced, patient and focused on minimizing your overall tax burden. They will take the time to understand your situation and help you navigate your options with the IRS.
When looking for the right team of tax experts, be sure to do your research. Take the time to read reviews and ask questions. When you’re confident you have the right team on your side, you’ll understand the bigger picture and feel better prepared to handle future encounters with the IRS.
At Franskoviak Tax Solutions, we have helped our clients with tax planning for more than 30 years. We provide comprehensive tax services with first-class expertise and a personalized, boutique-style approach. Speak to our team about personal and business taxes, payroll taxes, IRS tax relief and tax problems such as IRS tax notifications, payroll tax debt, delinquent taxes and more.
Start with a free consultation—we’re here to help you get ahead of tax problems, manage your back taxes owing and avoid unwanted attention from the IRS. To help you stay ahead of audit concerns, ask about our IRS audit protection services.