The IRS could be classified as one of the most powerful organizations in the U.S. Considering that that the IRS is solely responsible for collecting Federal taxes and imposing penalties for late, understated, or evasive filings, the IRS poses one of the largest financial threats to many individuals and business owners. To sum it up, the IRS has unique information resources, legal standing, and roles as a law enforcement agency. On top of that, the IRS also acts as a legislative-originating authority with a large amount of freedom to make mistakes with out consequences (no one can penalize the IRS for incorrect tax accusations).
So what can we do to minimize the IRS?s over-inflated accumulation of power and protect ourselves from its potential for financial wrath? Unfortunately, if there were a concrete answer for that, the IRS wouldn?t be the intimidating and widely feared agency it is today.
Since the IRS uses what filers provide (along with other miscellaneous resources) to help determine the accuracy of accused filings, our defense is greatly reduced. That?s the IRS?s whole idea! There is one thing we can do, each day, to better prepare ourselves for possible tax evasion accusations?keep records.
Quite possibly, our best defense against audits and false evasion accusations is to keep accurate, detailed records of cash flow, payments, earnings and other financial motions. Depending on your profession and your position within it, your specific approach could be extensive and time consuming.
A meeting with your financial advisor or accountant is a great place to start to find advice on what financial records and statements are the best to focus on to keep up your guard. Generally speaking, the greater volume of records you keep (and their accuracy), the better your chances are for surviving an all-out IRS battle.
At Russel J Spika CPA, we've been serving the accounting needs of Lewistown, MT and the surrounding areas for years. If you need help managing any aspect of your home or business's finances, we want to hear from you.
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