Running a business comes with inherent risks and challenges. It also involves the possibility of being contacted by the IRS – something no one looks forward to.
The threat of hearing from the IRS can be scary. After all, there are numerous reasons the IRS may audit you and not all of them are due to malicious actions – simple, innocent errors can lead them to follow up.
No matter what your interactions with them are like, dealing with the IRS will likely lead you to experience some level of stress. That’s why you should use a series of best practices when interacting with them to ensure the encounter runs as smoothly as possible from start to finish.
Meet your deadlines
The first step you can take in ensuring you don’t have additional issues with the IRS? Meeting all their deadlines. This includes deadlines for:
- Filing your returns
- Paying your taxes or any penalties owed
- Providing any documentation or additional paperwork requested by the IRS
- Responding to any requests for information or other notices within the appropriate time frame
Showing respect for all IRS-imposed deadlines is the least you can do to stay in their good graces. It shows you have respect for the process. It’s also a cost-saving measure as failure to meet IRS deadlines can lead to costly penalties later.
While you can’t control every aspect of your dealings with the IRS, you are able to maximize your chances for favorable outcomes by adhering to all cutoff dates. This also helps you avoid delaying the process and will move you towards quicker resolutions.
There may come a time when you run into compliance issues. Due to forces outside your control, you may not be able to accommodate an IRS request. Perhaps you find yourself absolutely unable to meet one of their deadlines. Maybe you need additional information from another member of your team who isn’t getting back to you in a timely manner. Or it’s possible you need additional time to make a payment or return documentation.
Whatever the issue you run into, it’s important to communicate these with the IRS as quickly and as clearly as possible. The second you’re aware of a potential problem that may lead to delays, alert them. Establish an open line of communication early in the process. When dealing with an IRS agent, it’s best to avoid giving them any surprises.
It’s important to communicate clearly so the IRS understands exactly what issues you’re facing and when you can expect to have them resolved by. Sending mixed messages will only complicate the matter, increasing the chances of a miscommunication that may cost you later on in the process.
It also helps to always be 100% open with the IRS about the status of your income, returns, and your ability to meet their deadlines or information sharing requirements.
For example, let’s say you’re unable to make a payment before the IRS deadline. Hiding the problem and refusing to pay without notification may lead to increased fines and a frustrated IRS agent who is unsympathetic to your cause.
If you’ve hit all previous deadlines and been otherwise communicative with the IRS throughout the collection process, however, you’ll want to be transparent about any problems you’re having. Contacting an IRS agent to be open about your issue may engender some goodwill and cause them to grant you a 1-2 week extension.
Obviously, every case is different. But absolute honesty is the best way to show good faith. It also increases the likelihood that the IRS may show flexibility in how your matter is managed.
The IRS offers a resource online known as the Internal Revenue Manual (IRM). This sets the guidelines for everything the IRS does, from collection, organization, management, security, privacy, rulings, the appeals process, and essentially every other operational aspect of the tax collection process.
You certainly won’t be able to memorize all these rules and regulations. But knowing they exist could prove helpful if you ever run into a future tax issue. Knowing how the IRS and their agents execute their mission will help you:
- Provide them with the exact information they need
- Know what will be expected of you throughout the process
- Understand your rights as a taxpayer
It will also help make you aware of resources the IRS is legally obligated to make available to taxpayers. For example, Part 8 of the IRM provides an overview of the Appeals process. If you disagree with a ruling against you, this can help determine if you’re able to remedy the situation in your favor. Part 13 spells out the procedures of the Taxpayer Advocate Service, established to help resolve taxpayer problems. Part 21 discusses Taxpayer Education and Assistance.
Knowing the rules you must follow will help you pay and provide the appropriate information in a timely manner. It also lets you know what tools you have in your favor in case a problem arises.
Work with a professional
The best way to lower the amount of stress you face in your dealings with the IRS? Partner with a tax representative who understands how to deal with them and has experience doing so.
Team up with a trusted professional to ensure a smooth encounter. TaxLane can help you with a variety of IRS-related issues such as an audit, wage garnishment, settlement of back payroll taxes, and settlement of debts and penalties. We also offer tax planning services for individuals and businesses to help you steer clear of any problems such as these.
Need help dealing with the IRS? Contact TaxLane today!