The likelihood of an audit is relatively low; however, if you were audited by the IRS, could your records validate your tax claims? Do you maintain a streamlined business reporting structure so that detailed information would be readily available in the case of an audit? Recently, a U.S. tax court case revealed how spotty documentation and processes can lend to unfavorable acceptance of tax deduction claims.
There are many factors than can impact audit results, including messy records or lack of substantiation, but consistently planning ahead and operating in a business-like fashion will help prepare you for the IRS.
For details on the recent U.S. tax court case and basic considerations in record keeping, read the Weaver newsletter article, Plan Ahead as if You Will Be Audited.