Working The Puzzle From All The Angles

  1. Home
  2.  • 
  3. IRS
  4.  • Should I worry about an IRS audit?

Should I worry about an IRS audit?

On Behalf of | May 19, 2021 | IRS

Once you submit your tax return, you might still lose sleep over it. You might lie awake expecting the Internal Revenue Service (IRS) to knock on your door and tell you they want to audit your company.


However much you trust your accounting team, you know mistakes are always possible when submitting tax returns. As the company owner or CEO, you take ultimate responsibility and will need to answer for irregularities. Thankfully the chances of an IRS audit are slim as they only audit about 1% of tax returns.


An IRS audit does not necessarily mean something is wrong


Let’s imagine your nightmares become a reality. You walk into the office to find a letter from the IRS saying they want to audit you. They always send a letter, they do not knock on the door.


The IRS may target you if it has reason to believe there are issues. Yet many audits happen because a computer program selects you. It can do this when your return differs from what it considers normal. As with anything, “normal” is a narrow definition, and many people fall outside it for a good reason.


The IRS could also select you for an audit because they are auditing someone else. If they audit one of your clients that says they paid you $1 million for a specific contract, the IRS wants to be sure your accounts say the same.


If you have concerns or find errors when double-checking your accounts, it might make sense to report these to the IRS before they mention them to you. Consider legal help to work out the best course of action. Tax law can be complex, and while the IRS knows people make innocent mistakes, errors in how you handle an audit could be costly.