IRS Audits Are On the Rise for Businesses and High-Income Individuals in Massachusetts

As promised, the Internal Revenue Service (IRS) is ramping up its efforts to audit businesses and high-income individuals. Shortly after last year’s tax season, the IRS announced plans to substantially increase its audit rates for these taxpayers—and so far, it is carrying through with its plans to do so. If you are a business owner or high-income taxpayer in Massachusetts, what does this mean for you? Boston tax audit lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, explains:

Mitigating Your (or Your Business’) IRS Audit Risk

In light of the IRS’ ongoing efforts to target businesses and high-income individuals, these taxpayers should take proactive steps to mitigate their audit risk going forward. Individual and corporate taxpayers who have concerns about prior years’ returns should assess the need to submit an amended filing or voluntary disclosure, and those leveraging tax strategies that the IRS has identified as potential red flags for tax evasion and tax fraud should ensure that their strategies clearly fall within the confines of the Internal Revenue Code.

Preparing for a Potential IRS Audit

Along with taking steps to mitigate their risk of facing an IRS audit, businesses and high-income individuals in Massachusetts should also take the necessary steps to prepare for the possibility of facing scrutiny from the IRS. While the IRS is conducting targeted audits, it is also selecting taxpayers for examination at random in some cases.

Preparing for a potential IRS audit involves ensuring that you have the documentation necessary to substantiate the figures in your (or your business’s) federal returns. It also involves ensuring that you have experienced legal counsel at the ready to communicate with the IRS on your (or your business’s) behalf.

Responding to an Audit Notice from the IRS

If you receive an audit notice from the IRS, what should you do? Once you find out that the IRS is examining your (or your business’s) federal returns, informed decision-making is critical. While you must respond to the audit appropriately, you must also be extremely careful to ensure that you do not inadvertently share any information that could lead to the imposition of liability for back taxes, interest and penalties.

One of the first steps toward responding effectively to an IRS audit is determining whether there are any compliance concerns you will need to address during the audit process. If not, then resolving the audit should simply be a matter of demonstrating compliance with the Internal Revenue Code. However, if there are compliance concerns that are likely to come up during the audit, this is a very different scenario.

Request a Confidential Consultation with Boston Tax Audit Lawyer Kevin E. Thorn

If you need to know more about the IRS’ ongoing efforts to target businesses and high-income individuals in Massachusetts with invasive tax audits, we invite you to get in touch. Call 617-692-2989 or contact us online to request a confidential consultation with Boston tax audit lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group.