Paying taxes is a necessary evil for individuals and businesses in Illinois. The main objective is to ensure that the required amount is paid in state and federal taxes while finding as many strategies as possible to mitigate it. In recent years, corporate tax rates have been a primary focus and concern as there is a perceived lack of fairness in what massive businesses are paying when compared to a person with a small business or a working person. Even those who are making a good living will want tax breaks. In some instances, there are red flags raised or a person is selected at random and they are subject to a tax audit. Receiving notification from the Internal Revenue Service that an audit is taking place can be worrisome and it is wise to be prepared from the start.
IRS will have hiring blitz to spur tax enforcement
The IRS is expected to hire a significant number of auditors to investigate and collect on unpaid taxes. In the past decade, the agency saw its audit staff reduce by more than 17,000. To address that, it will hire at least 2,000 new people. One-quarter are expected to specialize in criminal investigation while 1,300 will be revenue agents. Before this planned hiring boom, the IRS hired less than 350 people in the past seven years. As part of their attempt to crack down on tax avoidance, financial institutions will be obligated to give more extensive information about its dealings. Cryptocurrency and its growing popularity is a major factor in this decision as many people are believed to hide their income using it.
Experts believe that wealthy people should be cognizant of these changes. If the IRS has more staff, it will let them pursue more people and collect on what they say is owed. Keeping accurate records is a fundamental way to prove to the IRS that the taxes were accurate. Even with the number of people who are going to be hired, it will still take time for the IRS to move forward with its planned increase in audits. That is complicated by expected retirements of current staff.
Behaviors that will draw notice from the IRS
There are certain indicators that businesses and individuals should know about that will draw scrutiny from the IRS regardless of their staffing in the present and future. If there is extensive travel and expense (T&E), the IRS might look at it and wonder if it is accurate. Companies that have major cash income could face an audit to see if it is being reported in full. Many entities use independent contractors. This could be perceived as a strategy not to pay full-time workers and could mean classification issues. Finally, mistakes can garner unwanted attention with the IRS gauging if there are underlying missteps that result in lower tax bills.
Preparation is imperative if there is the threat of an audit
Taxes are a fundamental part of living in a society. If, however, there are allegations that a business or an individual has not paid what they owed or the IRS is simply investigating to ensure that there is nothing untoward happening, it is critical to have assistance that understands the ins and outs of tax law. This is essential if there is a tax audit. Having legal guidance can address the audit head on, deal with documentation, review the reports and provide extensive protection to reach a positive outcome. Even if it is necessary file an amended tax return, it can be handled efficiently. Negotiation can forge a resolution. When concerned about any tax-related challenge, it is important to have professional guidance immediately.