5 Key Insights for Defending Against an IRS Business Tax Audit in 2024

Posted in Offshore Account Update on March 15, 2024 | Share

The Internal Revenue Service (IRS) is ramping up its efforts to target businesses and their owners in 2024. IRS business tax audits can be invasive and present substantial risks; and, as a result, business owners need to ensure that they are making informed and strategic decisions. With this in mind, engaging an experienced Washington D.C. business tax lawyer is a key first step toward avoiding unnecessary consequences.

What Business Owners Need to Know When Preparing for an IRS Audit

Here are five key insights for defending against an IRS audit in 2024 from Washington D.C. business tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group:

1. The Look-Back Period for Most IRS Business Tax Audits is Six Years

In most cases, the IRS can examine six years’ worth of a business’s tax returns during a single tax audit. Even if revenue agents are only initially focused on the most recent tax year, they may expand the scope of their audit if they find a reason to do so.

2. The IRS Can Require Access to Numerous Types of Business Records

From financial statements to individual invoices and receipts, the IRS can require access to numerous types of business records during a business tax audit. While businesses must generally comply with revenue agents’ requests for documents, they must also be very careful to avoid inadvertently disclosing records that haven’t been requested or waiving the attorney-client privilege.

3. IRS Revenue Agents May Overreach

When conducting business tax audits, IRS revenue agents may—and occasionally do—overreach. For business owners, it is critical to be able to rely on experienced legal counsel to intervene as necessary.

4. An Informed and Focused Defense Strategy is Key

In addition to avoiding unnecessary and inadvertent disclosures, business owners must also focus on proactively developing and executing an informed defense strategy. This strategy should take into account the business’s potential exposure in the audit and focus on achieving a specific desired outcome. Depending on the circumstances, this may involve resolving the audit without additional liability, or it may involve targeting a settlement with the IRS that mitigates the cost of past mistakes.

5. IRS Audits Can Have Severe Consequences for Both Businesses and Their Owners

IRS audits can expose businesses and their owners to substantial liability for back taxes, interest and penalties. But, in some cases, the consequences of an IRS audit can be even more severe. If revenue agents uncover evidence of intentional tax evasion or tax fraud (or what they believe to be evidence of intentional tax evasion or tax fraud), they may refer the case to IRS Criminal Investigation for further inquiry and a potential referral to the U.S. Department of Justice (DOJ).

Schedule an Appointment with Washington D.C. Business Tax Lawyer Kevin E. Thorn

If the IRS is targeting your business in a tax audit in 2024, we encourage you to contact us promptly for more information. To schedule an appointment with Washington D.C. business tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, please call 202-349-4033 or contact us confidentially online today.

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