As you recall, we spoke to you about the fact that the IRS has increased their presence in the Knoxville area. We were told that fourteen new auditors were added in the local office. We were told just last week that the original number of examiners here was five, although I believe there were more. But the effect is that the chances of a business owner in the Knoxville area being audited have risen dramatically because the local audit staff has increased substantially.
We have also learned of a change in the new auditors’ training schedule. Last summer, they were trained in employee business expenses and sole proprietorships (Schedule C businesses). This summer they will be training in corporations (both C and S), so we expect to see a significant increase in the audits of corporations during the next 12 months.
Please pass along this information to your corporate clients so they can prepare now before getting a call or letter from the IRS.
The IRS is casting a wider net to try to catch tax cheats. Along with other CPAs, we have already seen an increase in both correspondence audits (conducted by mail) and field audits (conducted by a local auditor). Unfortunately, the net is catching more compliant taxpayers, too. They must endure the expensive and time-consuming task of proving that their returns are correct.
Once again, this underscores the importance of maintaining good records and complying with all reporting requirements. We want to keep you informed of these developments so you can help your clients be proactive in organizing and cleaning up their records. It is much better for them to solve any record-keeping problems now than to be caught with their “pants down” having to scramble under an IRS deadline.
As always, we are here to help you help your clients. Please feel free to contact us with your clients’ questions and concerns.
At your service,
