At one point, you may receive a letter from the IRS informing you of an audit on your Illinois business. This can be unnerving, but it does not have to be if you prepare for it. One thing to keep in mind, according to H&R Block, is the process can be lengthy depending on the method by which the IRS conducts the audit. The agent may do your audit by mail, at a local IRS office or in person. In person audits typically take the longest.
Expect that during the process, the agent will check all your reported income and go over all your accounts to verify the validity of any deductions and credits. The IRS wants to make sure you have reported all your income and taken only credits and deductions for which you qualify. Since the agent looks over all of your documentation, it might take up to a year to complete the audit process.
You need to comply with any requests the IRS makes and ensure you have all the documentation needed. To make the process run smoothly and hopefully expedite it, you should prepare to provide every piece of evidence you need to back up everything on your tax forms. Make sure you prepare to defend every deduction and credit and that you show a clear report of your income.
If you receive requests to provide additional information, always respond promptly. You do not want to miss deadlines as this could add to the time your audit takes to complete. Once you receive the IRS findings, you may appeal if you disagree within 30 days. This information is for education and is not legal advice.