Whenever you're contacted by IRS, the first step any business owner should take is to reach out to a qualified Tax Attorney. There are questions a tax attorney can answer for you such as: What kind of an investigation is being conducted? What information is IRS actually asking for? What are my next steps?
Your Tax Attorney will walk you through the process, advising you on when and if you need to meet with IRS investigators, what information you must share with IRS and what kind of investigation is being conducted.
There are 3 main types of investigations by IRS:
The first is a correspondence audit in which IRS sends a form asking for certain information. While this kind of inquiry may seem less serious, the way those questions are answered will directly impact the investigation they are conducting and your potential legal and tax liability.
The second type of investigation is when you as a business owner are asked to go to the office of IRS . In that case IRS gives you only two opportunities to share information. If you should miss that first meeting, they will make assumptions and give you only thirty days to correct those assumptions or their assessment of your tax responsibility will become a final tax debt.
The third type of IRS criminal investigation is the one in which IRS comes to your place of business to ask questions.
When IRS is conducting a criminal investigation, agents may pull up in a black car with badges and come into your place of business, or residence, or, they may reach out to your CPA and ask them questions about your business. In any and all of these cases bringing a tax attorney onto your team is the best decision you can make.
A qualified Tax Attorney can exercise attorney / client privilege and support you and your CPA in times of IRS investigation.