As you make your way to the mailbox these days, chances are good that your biggest fear may be a large credit card bill, a rejection letter for a job you really wanted, or an unwanted invitation.
Audits are not necessarily the end of the world for the person being audited, though you would be justified in feeling so. Audits can be incredibly punishing, and they can also be a massive time-sink for the individual under audit. So how do you survive an audit and what are your options during the process?
With just two weeks to go until Tax Day, it is important for everyone who hasn't filed their taxes to get to work. Doing your taxes isn't a fun exercise, nor is it a task that anyone really looks forward to, but you have to do it. Simply letting the deadline pass without filing your taxes is unacceptable, and it can lead to serious consequences for both individuals and businesses when they fail to file.
A study performed by four professors at a variety of U.S. universities has found that the closer a company is to an IRS office, the more likely it is that the company will be audited. This may seem obvious at first, but you would think that the Internal Revenue Service would use their uniform rules in a uniform manner -- thus negating any proximity effect when it comes to auditing businesses.
We have talked about the impending Tax Day and the fears that many people have about an audit on this blog a lot recently. These fears are rational from the perspective of someone undergoing an audit. The punishment and consequences with this action by the Internal Revenue Service are severe, and no one wants to deal with the monotony of an audit.
In our last post, we talked about how the Bipartisan Budget Act of 2015 and what it means for partnerships going forward. The simplification of the auditing process for partnerships was a huge boost for the Internal Revenue Service. It is now much easier for the IRS to audit partnerships, and these businesses must be prepared for this new world when the calendar flips from December 2017 to January 2018.
When the clock moves from 11:59 p.m. on Dec. 31, 2017 to 12:00 a.m. on Jan. 1, 2018, the tax rules will change for partnerships. In 1982, the Tax Equity and Fiscal Responsibility Act was passed and under those rules and regulations, taxes for partnerships have been defined and used ever since. But the rules are about to change in a big way next year.
It is now February 1st, and all employers were required to mail or send out their W-2 forms by yesterday. If you haven't received your W-2s yet, you shouldn't panic. But you should be receiving them very soon. As these documents start coming in, taxpayers will soon come to grips with the fact that they need to get their taxes done.
To claim that the Internal Revenue Service continues to have an image problem is an understatement. From wage garnishment to criminal prosecution, the nation's tax agency is best known for their enforcement actions.
Completing your federal income taxes is a monumental event that brings a sigh of relief. However, any euphoria over the annual accomplishment quickly dissipates with a common nagging fear: an audit.