Tax Authorities Won’t Forgive You When You Make Mistakes In The Tax Return

If you have an accountant, it is very likely that you will be offered audit insurance for assistance in case there is a need to respond to a tax audit. During a tax audit, the tax returns will be investigated and reviewed by tax authorities. Substantial costs can be incurred in proving the accuracy of your tax returns if you do not have insurance.

It is normal for people to make mistakes and expect to be forgiven. However, it does not work this way when there are errors in your tax return because the IRS is not as forgiving as humans. Once you make an error in your tax returns, you can start expecting a notice from the mail that your tax returns will be subjected to audit.

Even if audit insurance will not eliminate the problem with IRS, it will lessen your trepidation and dread from the costs that will arise as the accountant sorts out the audit requirements. There is no exact estimate on how long the audit will take but it will certainly impact on the costs. Even the most basic audits that inquire about a certain deduction may take a significant amount of time to address. This means that the accounting costs can add up and leave you with astronomical professional fees.

Even if there are no indications that your tax return may be audited, the number of audits on businesses is on the rise. This means that the likelihood of being audited has increased. If you have audit insurance, it lessens the gravity of your problem because you won’t be worrying about professional fees. Meanwhile before you sign on the dotted line, understand all the intricacies of the policy and whether it is specific to your situation. Make sure that it you who is insured and not your accountant only.

For accountants and their clients, the audit insurance can be considered as a win-win solution. It is the most cost effective protection that you can provide for yourself and your business, if you have one.  Audit insurance is a not a compulsory offer but if you are given the opportunity to participate, why don’t you give it a try?

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