Adequate documentation is key when defending against an IRS audit.
Many dread the concept of an IRS audit. These days, the most likely type is a “desk” audit, whereby a missing item of income or adequate documentation of a deduction is requested. Sometimes, the client just doesn’t receive, or misplaces, a source of income and doesn’t necessarily have an alternative source of documentation for that income, thus an adjustment is assessed. The matter is then easily closed, through a payment by the taxpayer. The IRS achieves success in finding money for the government.
We work with some clients who indicate that they have deductions, but recordkeeping burdens can create a situation where, although the deduction amount is correct, adequate documentation is not readily available. We are not suggesting that everyone drop everything else that goes on in life to invest the huge amount of time the IRS estimates is required to maintain adequate documentation for certain deductions. However, we need to take this opportunity to remind you that, like every year, several tax court cases came down to negative conclusions not only for the tax due but, without maintaining adequate records, the court upheld the accuracy-related penalties assessed by the IRS. Discuss contemptuous records requirements with your tax professional to assure that you only spend the time necessary and yet have the documentation that meets minimum requirements.
Whether you are a business, individual, or non-profit – feel free to reach out to us with any follow-up questions. With one call or email we will provide you with professional, complimentary advice – no obligation. Just contact us at info@czarbeer.com, or call (212) 397-2970 and we will be happy to help you and answer your questions.