If you surveyed the average American about what they fear most, a tax audit is probably near the job of the list, just after natural disasters. Tax audits are a fact of life for many, particularly those who have significant assets or who own a business. And, in reality when faced with a tax audit it can be less frightening than it is from a distance, since it is often easier to tackle a concrete set of problems than to worry about a nebulous threat.
In the case of a tax audit, the IRS will ask for very specific information and sometimes specific types of documentation. This information can sometimes be difficult to locate and organize for the IRS, particularly if a large disclosure is required. As a result, many taxpayers and businesses have to ask for months or even years to gather everything.
Now, new rules will impose a stricter deadline on any audit for a person or company with more than $10 million in assets. This new policy will still allow for flexible deadlines, but does impose penalties for failing to meet any deadlines with the IRS, including potential court action.
Some experts have criticized the imposition of stricter deadlines, saying that it will have negative consequences for businesses. As with other changes to IRS policy or enforcement, this one is simply one more thing to make sure to keep an eye on the situation and to consult a tax law professional if any concerns arise that might apply to you or your business.
Source: Reuters, “Hand over tax audit information, clock is running: IRS,” Patrick Temple-West, Nov. 22, 2013.