The push to audit S corporations (described above) is part of a larger IRS initiative to examine more returns, particularly of small business owners. Don't think you're immune just because you've been able to fly under the radar so far.
Starting with our next issue, Research Recommendations will kick off a three-part series, Conquering an IRS Audit. We'll show you how to handle whatever the IRS dishes out and how to beat the IRS at its own game. The three upcoming issues will describe the best strategies for responding to the three different IRS audits:
Correspondence audits (Sept. 19 issue). These audits, typically done via mail correspondence, are the most common audit method and usually the least threatening ... if they're handled correctly.
Office audits (Oct. 4 issue). These more-complex audits require you to visit the IRS on its own turf.
Field audits (Oct. 18 issue). Such audits, where the IRS agent comes to your home or office, pose the biggest risk because they're usually reserved for big-ticket returns and sophisticated tax issues.
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- Small Business Tax Deduction Strategies
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- Craft 'last-chance' agreements with on-the-ropes workers