If ever your business is facing an audit, it is crucial that you stay calm and consider planning your next step. Whether your tax credit is examined or perhaps your IRS wants to know about another tax incentive claim, it’s best to consider a tax audit representative.
There are a lot of outsourced tax consultant companies that actually provide audit representation for clients. Also, working with a consulting partner is an added advantage because the consultant is aware of the documentation that you filed and also on your eligibility on specific tax credits that are based on prior experience with the company.
The tax consultant will be able to ensure conversations with tax authorities and is also focused on the details about the audit. Through communicating with the IRS or perhaps the state representative and advising the company on what information to give, the audit representative will help to prevent the audit from having to expand and include other areas of your business.
The audit representative needs to likewise help in understanding the laws that are related to your tax return, the problems on filing, and on how to properly submit the documentation. Without tax law expertise, it is actually not advisable in going through audits alone. Below are some of the benefits that can be obtained from hiring a professional audit representative.
Addressing Potential Filing Mistakes
There are in fact different reasons why your tax credit claim is challenged. The audit representative should also be able to give a sound argument from any possible mistake that is identified during the time of a tax audit.
Completeness
The representative needs to actually prove that all of the transactions actually have been recorded for your financial statement.
Allocation and Validation Process
All of the items that are included with the financial statements need to be recorded as the right amount. Also, the audit professional needs to prove allocations or the valuation adjustments that are made and are disclosed.
Understanding and Classifications
The audit representative needs to also ensure financial information will be presented appropriately and is disclosed. Also, simple languages need to be used.
Obligation and Rights
Tax consultants also need to prove that the business has the right to the assets and that you are truly free in using it. The business also is required in paying liabilities that are included in the statement of financial position.
The Existence
The audit professional needs to actually prove that the liabilities, assets, and also equity interests will be physically present and one that needs to belong to you.
Cutoffs
The events and the transactions need to be recorded also in the right accounting period.
Consider Speaking with your Tax Consultant
When you are ever planning for an upcoming audit, you should consider keeping the audit professional informed about your particular preparations. Employment credits, cost segregation studies and green building credits, in fact, are all valuable tax-saving strategies. Also, providing proper support for the claims will allow the business to retain the said benefits.