It might come as a shock, but the IRS occasionally makes mistakes. Even more surprisingly, those mistakes occasionally wind up in your favor! When it comes to business tax refunds, calculating underpayment interest, and financial penalties incurred against your business, the IRS might come to the wrong final figures.
When any of these calculations result in your company overpaying, you are legally owed by the IRS. The problem is, many of these IRS errors go unnoticed.
How to identify IRS errors in your favor
- Cleaning house. Have your trusted local tax firm periodically assess all your business account transactions.
- New penalties? If your company is still young and hasn’t incurred tax penalties in the past, discover what has changed. It may be an error.
- Ask the questions. Has your company filed amended returns, carrybacks, or tentative allowances with the IRS? If you’re hearing from the IRS about unexpected transactions, seek out professional advising.
- Track your history. IRS audits are highly technical and in-depth. If your company is subject to an audit, keep all records and findings. They may benefit you if future errors are discovered.
Is your business at risk of IRS errors?
Any company or individual can experience an IRS mistake in their favor. IRS audits are performed by people, not machines. Because of the extensive technical nature of audits, human error is a real possibility.
Young companies and startups are typically at a greater risk of IRS errors, particularly when changing business entities or establishing initial business accounts. Curious if the IRS has made an error in a past audit or tax season? Contact Lifetime Tax today for an expert assessment. We’ll help you find out!