Somewhere in the world of small business we’ve come up with clever ideas to keep the IRS from getting all of the tax dollars due to them. I’m not sure why, but we think we can outsmart the highly trained and educated IRS auditor who makes his living investigating financial rabbit trails. You should know in advance that the IRS will, in most cases, stand by the auditor’s judgement call leaving you owing back taxes, penalties at an accessed rate of 20% or more (up to 75%), and interest accrued monthly from the time of the original filing deadline.
Here are some actions (or non-actions) that could get you in trouble in the event of an IRS audit on your business.
THE IRS’ DEFINITION OF NEGLIGENCE AND INTENTIONAL DISREGARD
- Failure to keep adequate books and records
- Inadequate controls for processing and reporting business transactions – this includes co-mingling of…
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