A commissioner with the Internal Revenue Service said the federal agency needs to improve the way it approaches audits for small businesses. The commissioner told a crowd at a conference held by the Institute of Certified Public Accounts that the IRS needs to more carefully select each small business being considered for a tax audit, refraining from new audits for small business. The official is associated with the IRS’s small business department.
Both business owners and private filers in Texas can face audits if the IRS finds their tax returns include data that is inaccurate, difficult to confirm or simply missing. Parties found to have submitted incorrect tax returns can be penalized with fees, garnished wages and tax liens. This makes it important for any tax filer to defend their returns if they come under question.
In partnership with the National Research Program, auditors hope to streamline their process of identifying, assessing and filing audits on small businesses. Officials say they are also considering ways to make the way the IRS selects taxpayers to be audited in an more efficient and precise manner.
With an improvement in its selection process, the IRS’s power to issue tax audits, thousands of Texas residents are still at risk for audits and other punitive action. If fact, fewer flagged tax returns will allow the IRS to more thoroughly scrutinize the parties still facing audits.
The IRS and NRP have announced a number of new tools and methodologies, such as better training for less experienced tax officials and continuing education for season auditors. The commissioner asserted that improving the skills of individual agents will result in more efficient analysis and auditing. He added that the IRS has never launched large scale training endeavors in the past. He acknowledged that the needed cooperation between several entities will likely be difficult to obtain until officials have a better idea of how the new auditing practices work.
CFO, “IRS Needs Help to Improve Small-Business Audits, Official Says” Kathy Hoffelder, Nov. 15, 2013