Three ways to escape the IRS penalty monster

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in Small Business Tax,Small Business Tax Deduction Strategies

When it comes to avoiding IRS penalties, the best offense is a good defense: Avoid being assessed penalties in the first place. Here are three key steps:

1. Hire a competent tax pro. Hopefully, a professional will give you lots of valuable tax-saving advice. But even more important: As you will see throughout this Special Report, having a tax pro on your side is highly recommended when things turn ugly.

2. Stay away from the bad seeds. When tax professionals take outrageous or unfounded tax return positions on behalf of their clients, they can land on the IRS “problem preparer” list. Their clients are likely to be audited more frequently than those of other tax return preparers. At worst, the IRS auditor will be suspicious of your return from the get-go.

3. Keep your tax specialist in the loop. How can you expect good advice if you don’t provide all the necessary facts and figures? Update your tax professional periodically on your situation. The tax law presumes that you—not your tax return preparer—are ultimately responsible for your return.

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