IRS To Expedite Small Business Audits

By Global Tax Weekly

It is an unfortunate fact of modern life that small businesses suffer most from adversarial tax systems, because most can’t afford to employ armies of tax attorneys to fight their corner, or expend the time necessary to defend themselves.

Indeed, as any small business owner who has been audit will no doubt testify, these procedures can be extremely stressful. The House of Representatives Small Business Committee held a hearing on this very matter last year. It heard how in some cases small firms had shut down as a direct consequence of an audit. As Steve Chabot, the panel’s chariman, observed in his introductory remarks: “I know members of this Committee have heard from constituents who were audited so aggressively by the IRS that they had to close their doors. Others are engaged in protracted audits that seem like vague fishing expeditions, with no end in sight.”

So, rare praise for the Internal Revenue Service this week for its new commitment to expedite small business tax audits, limiting their length to a maximum of 60 days. That’s still an awfully long time for a small business owner to sweat over the implications of an audit, with the prospect of penalties draining precious resources from their firm. But it’s a slight improvement on the current situation nonetheless. At present, IRS guidance on small business audits doesn’t offer taxpayers any clues as to how long a tax audit may take – not even a ballpark figure. Which hints at the terrifying prospect that one might be audited in perpetuity. So perhaps we should be grateful for this small mercy.

Yes, it’s fair to say that the IRS is not everyone’s favorite arm of the US Government. But you could probably quite easily say that about any tax authority, anywhere in world.

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