How to Deal with the IRS as a Business
If your company receives a notice from the IRS, it is vital that you take it seriously. By ignoring it, the government could assess fines or other penalties without a hearing or other forms of due process. However, by acknowledging the government’s position, it may be possible to resolve the matter in a favorable manner.
Try to Establish a Relationship with IRS Agents
The best way to get a favorable outcome in a tax case is by establishing a rapport with the agent assigned to your case. This generally means answering phone calls promptly and providing a place for that person to review records. It may also mean taking time to meet with that agent personally to discuss the matter. That being said, CBS News recommends, “remember the reason why you’re talking with your agent: It’s not to make new friends. Don’t chit-chat or exchange casual conversation. Each comment you make gives the auditor more information about you. But also keep cool and stay calm. Never be argumentative, stubborn or belligerent.”
Work With the Government to Rectify Issues
In most cases, mistakes made on a tax return are committed inadvertently. In other words, you likely didn’t fail to report income or fail to make payroll tax payments on purpose. However, that doesn’t mean you won’t have to pay for your mistake. According to TaxProEZ, “if you have the money to pay the IRS–or will likely have it in the future–no amount of negotiating will convince the IRS to settle for less than you owe.” Therefore, determining how these mistakes occur can be a good idea so they won’t happen again. As long as your company negotiates in good faith, it should be possible to create a payment plan or other method of paying what you owe conveniently.
Do Not Impede the Government’s Investigation
While it is acceptable to ask for more time to develop a defense to an audit, you shouldn’t interfere with an investigation. If you feel like you may say or do something that may violate this principle, hire an attorney or enrolled agent to handle the case for you. The IRS itself even recommends, “If you disagree with the IRS’s determination, you may request an appeal with the Office of Appeals by filing a written protest. You may represent yourself, or have a professional represent you. The representative must be an attorney, a certified public accountant, or an enrolled agent authorized to practice before the IRS.” In fact, it may be a good idea to hire an attorney to help develop a legal basis for why the IRS is wrong to audit the company.
It is also a good idea to make sure that employees are free to speak with the IRS without fear of reprimand. Remember, if you feel like the government is not treating the company fairly, there is always a chance to appeal later. That is almost always preferable than being passive-aggressive during the actual audit.
If your company is facing IRS scrutiny, be sure to handle it in a calm and professional manner. The Dough Roller highly recommends, “If you get to the end of an audit or an appeals process and you owe money, make arrangements to pay it as quickly as possible. Remember, the longer your balance is outstanding, the more you’ll owe in penalties and interest. And if you refuse to pay for long enough, you could face a federal tax lien or a levy of your property.” Being responsible, on time, and not making excuses for behavior are all seen as good things that can benefit your case. This may even result in the government waiving some of the fees or interest charges originally listed in their first assessment.
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