Getting audited is never a fun process. Individuals are often terrified and even big businesses worry about the time required to comply with tax audits and the impact on their bottom line. If you are expecting a happy ending to this post, stop reading. Things could get much work beginning in January.
IRS LB&I Division Announces New Tax Audit Rules
New IRS rules kick in at the beginning of the year for businesses and wealthy taxpayers. The new rules only apply to businesses or individuals worth more than $10 million. The IRS’ large Business and International Division (LB&I) issued a memo indicating that auditors will be imposing strict new deadlines for information requests. That adds burdens to businesses who sometimes must put together tens of thousands of pages of information in order to comply with IRS Information Document Requests (IDRs).
Revenue agents and taxpayers can still negotiate the initial deadline for supplying documents to the IRS. If that deadline isn’t met, however, a new 49 day countdown begins. The IRS will send two warning notices including a notice to the company’s CFO if the taxpayer is a business. After the 49th day, revenue agents are instructed to seek court enforcement of their data demands.
An IRS IDR is not a public document meaning a business’ competitors and creditors don’t usually know of an audit. A court summons is a public document, however, and could scare investors.
If the IRS is true to its word, we expect to see many more summons enforcement actions. Depending on the company, those could hurt share prices and weaken confidence.
If your business is under audit, don’t delay in seeking help. We have provided tax audit defense for all sized businesses from sole proprietorships all the way up to a Fortune 500 corporation. Our IRS tax attorneys know how to work under pressure and fully protect your rights.
Founding partner Brian Mahany is a former agent, Assistant Attorney General – Tax and commissioner of Maine’s state revenue agency. Our team has decades of tax audit defense experience ready to help you and your business.
Post by Brian Mahany, Esq.