J.K. Lasser's Small Business Taxes 2018

CHAPTER 33Handling Audits with the IRS

1. Types of Audits
2. Appeals
3. Litigation
4. Mediation
5. Taxpayer Bill of Rights
6. Taxpayer Advocate Service

Alert

At the time this book was completed, Congress was considering important tax changes that could affect 2017 tax returns and planning for 2018. Check the online Supplement in February 2018 at www.jklasser.com or www.barbaraweltman.com to see what changes have been enacted and when they are effective.

The word “audit” sends shivers up the spine of a small business owner, and for good reason. Tangling with the IRS diverts the owner's attention from running the business now to hashing over old taxes. An audit may also wind up costing the owner hefty professional fees for representation and additional taxes, penalties, and interest. The good news is that audit rates for most types of businesses are down and not expected to grow anytime soon (see Chapter 1 for audit statistics). Still, if you are selected for examination by the IRS, these statistics are little comfort to you. When you receive a letter from the IRS stating that you are under examination, you need understand what it means and what you can or should do.

This chapter is intended to give you only an overview of the audit process and your options for dealing with it. For further information about tax audits, see IRS Publication 1, Your Rights as a Taxpayer; IRS Publication 556, Examination of Returns, Appeals Rights, and Claims for Refund; IRS Publication 3498, The Examination ...