- August 15, 2024
The New York state tax audit process strictly adheres to some basic rules. If there is something problematic in tax preparation, the businesses may receive notice from the NYS Department of Taxation and Finance to provide more relevant information. Once you respond, the auditor will let you know about the finding, with which you may agree or challenge the decision.
Some audits are really complex based on several factors, including the type of audit, the type of tax, and the complexity of the issues. If your audit involves minor problems and you don’t know how to solve them, consult a tax preparation service in New York for filing taxes.
Understanding IRS business tax audits
While auditing your business tax returns, the IRS analyzes whether you include all income and take only the deductions and credits according to the law. The IRS doesn’t audit unless there are some glitches. Once you have submitted the returns, the IRS takes almost three years to finish the audit. They return audits in three ways:
- At an IRS office
- By mail
- In-person
How should tax preparation services in NYC address an IRS business tax audit?
The scope of tax audits
Mail audits are limited to a few items on the audit letter from the IRS. Office and field audits require more work. You need to gather the requested documents and prepare to answer detailed questions about your business’s finances and activities. You have to explain your business’s accounting and record-keeping systems. For office and field audits, it’s recommended to get a licensed tax professional for filing taxes in New York.
Prepare yourself for IRS questions
For a mail audit, respond to all items the IRS is questioning in their letter. For office and field audits, gather all requested information and prepare to present it to the IRS officer. Be ready to answer questions about unexplained bank deposits, additional income, your job, your family, and any outside businesses. Essentially, you need to account for your entire year’s activities. If you lack documents to prove any items on your return, reconstruct them from third-party records. If a third party can verify an undocumented item, use techniques like an affidavit for filing taxes in New York.
Give a response to IRS requests for information
If the IRS thinks your business return needs changes, they will ask more questions. You’ll receive an Information Document Request (IDR) for more details. It’s important to respond fully by the deadline. The IRS may disagree with your deductions or reported income. If you disagree, present your interpretation of the facts and tax law. The IRS will close the audit, either proposing no changes or adjustments. You’ll get a report of their findings and a letter allowing 30 days to appeal if you disagree.
Contact Us!
There is no doubt that the IRS tax audit is complicated. So, if you are facing an audit, it’s important to consult with an expert for filing taxes in New York. To learn more about this, contact us at A Fortune Builder LLC.
