How to survive an IRS Inspection?
Running a business, it’s a really tough business, especially if we have all the documentation issues on our hands. Such documentation is useful, especially when we have to reach for it to make it a bargaining chip for us. We need to remember that from time to time an inspection from the Internal Revenue Service, among others, may knock on our door. Such an inspection may be routine or it may be an inspection related to the discovery of certain irregularities in accounting with the Tax Office. This uncertainty and anticipation of the day of the inspection in many of us causes the effect of severe stress, irritation, etc. Our fears, accompany us even despite our diligence in keeping accounting documents and meticulous accounting with the Tax Office. It should be remembered that this institution will very carefully check even the smallest detail of our business finances. Hence, we should see to the taxation of all income and avoid misleading tax returns.
Our law is full of nonsense, the interpretation of which may have its consequences during a tax inspection. We must remember that the Tax Office may have a different interpretation of the given regulations than our supposedly correct interpretation. Therefore, we should not be afraid to apply to the Tax Office for an interpretation of the issue we are interested in. We should pay attention to do it before the announcement of the audit. If the day of the inspection notice already occurs : The most important thing is not to panic but to follow the prescribed rules. Only then will we be able to survive the onslaught of such an inspection, and as long as we have nothing to hide we need not fear the consequences. When it comes to the day of the inspection, let’s remember the golden rule: that we can meet with two types of officials conducting the inspection: those doing their job reliably in a correct manner avoiding pushy looking for a hole in the whole – a type of human inspector. We may also have the pleasure or rather the unpleasantness of an inspection with a so-called “clerk”, that is, a person attaching himself to even the smallest detail with the aim of imposing an appropriate penalty on our enterprise. Such officials treat us in advance as if we were already guilty, without presenting concrete evidence. And it is such inspections that are precisely the worst.
But what to do? First of all, we must not let ourselves be led astray, as this can be a costly lesson for us. Therefore, in both cases we need to behave fairly naturally, without unnecessary emotions and also without unnecessary movements. It is also best to let go of unnecessary conversations and only answer the questions of the official in question. However, before we move on to the actual inspection, we must identify our inspector, only in this way we will find out whether he has the appropriate authorizations. There are exceptions when, in accordance with Article 281a and Article 284 of the Tax Ordinance, an emergency inspection is allowed using the ID card alone. This usually happens when there is a likelihood of damage, or removal of evidence which is treated as a tax crime.
Fortunately, now such unexpected inspections, are no longer valid. In light of the amended regulations, the Tax Office must send advance notice of a planned inspection. This will cause us to know in advance the date of the inspection. We will have as many as 7 to 30 days to prepare for such detailed checks. Of course, these provisions will apply to companies where there is no suspicion of tax scams. In the case of such indications, the tax office will further not have to inform anyone.
Inspection of the tax office, what to do?
It is worth remembering that in case the inspector will not have an authorization, concerning the immediate inspection and will do it against our will. Then the entire procedure is performed in violation of the law. Not only that such an inspection is invalid, but the inspected person has the opportunity to claim damages in court. The duration of the inspection depends on the size of the business. If we have a micro-enterprise, then the inspection from the tax office, too, is not particularly long because for such small companies the office can devote a maximum of 12 working days per year. So it can be just one inspection lasting the said 12 days, or 12 different inspections lasting 1 day each. For larger companies, the inspection period can be much longer. The tax office has much more information to check which, it is impossible to check in one week such an inspection can therefore last even more than one month. As you can see, the procedure may be different each time. We can’t expect to face only one audit a year.
Is it worth risking an inspection by the Tax Office?
Admittedly, every IRS audit is different. The way it is carried out is different, but we can be sure of one thing. It is worthwhile to account for every zloty earned, so that during the inspection we could safely survive this difficult time for everyone, without major nerves and, most importantly, without any consequences.
