IRS Business Tax Audits: Protecting Your New Jersey Business (and Yourself) in 2024

The Internal Revenue Service (IRS) relies heavily on its audit authority to hold businesses accountable for underreporting and underpaying their federal tax obligations. With additional resources at its disposal, the IRS has announced plans to increase its audit rate in 2024, and it has specific plans to target businesses for income tax fraud, employment tax fraud, Employee Retention Credit (ERC) fraud, and other corporate tax law violations. For companies that find themselves in the IRS’ crosshairs, engaging an experienced New Jersey business tax lawyer is a key first step toward achieving a favorable outcome.

What You Need to Know if the IRS is Auditing Your New Jersey Business

What do business owners need to know about facing an IRS audit in 2024? Here are five key insights from New Jersey business tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group:

1. IRS Business Tax Audits Can Target a Wide Range of Issues

IRS audits can target a wide range of issues. When facing a business tax audit, it is critical to have a comprehensive understanding of all of the issues that could lead to the imposition of liability for back taxes, interest and penalties. Some of the issues that we have seen come up fairly consistently in recent IRS audits targeting businesses in New Jersey include:

• Claiming improper business expense deductions
• Claiming false payroll expenses
• Failing to properly collect and remit FICA taxes
• Failing to properly report income in all forms (including cryptocurrency)
• Improperly claiming the Employee Retention Credit (ERC)

2. An Informed and Proactive Defense Strategy is Critical

Regardless of the specific issues that come up during an IRS business tax audit, an informed and proactive defense strategy is critical. To avoid unnecessary consequences, companies and their owners must focus on achieving a specific desired result based on the relevant facts and tax code provisions.

3. IRS Audits Can Present Substantial Risks for Both Businesses and Business Owners

Businesses that have underreported and underpaid their federal tax liability can face substantial penalties following IRS audits. Along with back taxes, interest and civil monetary penalties, when the IRS finds cause to allege intentional tax evasion or tax fraud, businesses (and their owners) can face criminal penalties as well.

4. Mistakes and Oversights Can Prove Costly

Due to the risks involved, mistakes and oversights during IRS business tax audits can prove extremely costly. Again, informed decision-making is critical, and business owners need to rely on the advice of experienced tax counsel.

5. The Best Approach Depends on the Circumstances (and Risks) Involved

When facing an IRS business tax audit, the best approach depends on the circumstances—and the risks—involved. Not only do different types of defenses apply in different circumstances, but civil and criminal tax audits require altogether different approaches.

Request a Confidential Consultation with New Jersey Business Tax Lawyer Kevin E. Thorn

If you need to know more about how to successfully defend against an IRS business tax audit in 2024, we encourage you to get in touch. To request a confidential consultation with New Jersey business tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, please call 201-842-7696 or contact us confidentially online today.