Tax advisors are no longer equipped to react to the demands of increasingly aggressive taxing agencies. With offices running leaner, lengthy audits can irreparably harm a business and the tax advisor’s reputation. A reactionary approach to audits doesn’t work anymore.
All tax returns filed are time bombs. Accuracy is challenged by a taxing agency accessing a third-party data source for compliance. Agencies have the resources to place an extra burden of proof on the SMB in a constricted time period to respond.
Federal and state governments are focused on maximizing tax receipts. Outdated audit manuals, following the “this is how we’ve always done it” procedure are helping them achieve that goal.
New electronic payment methods from emerging online distribution services, such as DoorDash and Uber Eats, complicate tax reconciliation, creating a “grey area” for interpretation by the taxing agency; usually to their benefit.