There is no perfect tax regime where everyone goes home happy. And let's face it, who would love to pay a sum of their earnings to the government? For sure, only a few people would. But love it or hate it, taxation is here to stay lest we suffer from poorly maintained infrastructure.
Then again, you cannot simply rely on the Internal Revenue Service to make accurate determinations of your tax liabilities. There's always room for error, and in a bid to protect the financial interests of your business, you should be prepared to dispute your taxes.
There's a right way of doing it. If you think you are being made to pay higher tax rates, then here are a few things you must do:
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Gather all relevant documents
You will need to develop a strong tax case, so it's important to get as many records as you can to state the merits of your case. Doing so will help you gain an advantage and prompt your legal team to build a strong argument in your defense. Effective record keeping and document filing is needed to ensure that all the necessary paperwork is accessible and ready to be used in court.
You will need to develop a strong tax case, so it's important to get as many records as you can to state the merits of your case.
For this, it’s always important that you maintain a ready archive of all your documents. However, you should have second thoughts before you upload digital copies in an online drive. It’s also crucial that you create an effective filing system that keeps track of the paper trail and helps you produce the necessary materials your lawyer needs to represent your case. You may also need to prepare copies of receipts and other documents and make sure to secure these up until the situation calls for it. Doing so will come in handy when it comes to appealing your taxes.
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Analyze past returns
In your defense against a tax auditor, your legal team has to focus on those details that could help you win the case. For sure, it's not only your tax advisor and tax lawyer that should be working to analyze the documents you produce. You also need to provide your own insights and those from other experts who specialize in a certain approach to analyzing past financial records. According to forensic economists at The Knowles Group, it helps if you can understand the value of these documents using proven research methods.
Forensic economists are particularly useful when it comes to supporting your business as it undergoes a legal and fiscal review. Using a variety of techniques, these specialists can help out in culling documents that will support your side. For sure, you can either lessen your tax liabilities or steer clear of any penalties you might incur.
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Build a stellar legal team
Of course, it’s important that you have a corps of legal experts by your side to give valuable advice on what to do and what not to do if you are being audited. It’s important, in this sense, that you work with a firm that has considerable experience in handling simple and complex tax cases. Make sure to get recommendations from business partners or tax professionals so you can find people who can help you understand your case in a simplified manner.
When it comes to interviewing applicants, make sure you create a ready checklist of questions that will surely help you separate the seasoned veterans from the inexperienced younglings. Still, experience isn’t the only factor to consider when choosing lawyers for your team. Even those who just passed the Bar can readily qualify if they already showed potential back in law school. Even better is when you select attorneys who took up undergraduate programs in the field of business management and accounting.
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Consider an appeal
If everything doesn’t go well and you have just been handed down a negative tax verdict, the world has yet to end for you. Depending on the advice of your tax lawyer, you should be able to appeal the decision if the facts fall in your favor. This would be applicable when you own commercial property but it is also applicable in other areas as well.
Now, there are ways you can appeal your business property tax and these differ from state to state. In Texas, for instance, you can send an appeal letter to an appraisal review board which will then organize a hearing. You may want to obtain documents and other assets that justify your current tax status, but you have to do so within a 14-day period before the hearing proceeds. This will be very helpful if you think the ARB has overassessed your property, in which case, you need to conduct a proper inventory of all the assets you have purchased since you started operating. This can get tedious, but it will all be worthwhile as you get a more exact evaluation of your business liabilities and give your business a much-needed boost.
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Do your own research and stay informed
Understanding tax laws can be difficult at best, but you shouldn’t be clueless with what’s going on with your case. Work closely with your legal team and pay attention to what legal actions to take. As much as possible, do your own research and consult with your legal team if you found certain anomalies in your tax records.
But don’t wait before these anomalies turn up. An effective pre-emptive measure would be to hire accountants and consultants who can help you make the right decisions. You may also want to host seminars and workshops that will add to the current skills your tax team already has. Lastly, there are also events that cater to certain aspects of tax litigation, so you might want to send someone over who can network with legal and financial experts and impart best practices to everyone else on your team.
The fate of your business rests in your ability to handle a tax case. With the tips above, you should be able to prevent any complications from arising.
