Certified Public Accountants have received word and are ready to help out with the new IRS business income matching incentive. The IRS has always been in the practice of matching individual tax returns to CP2000 notices. These notices provide information statements for any proposed under reporting adjustments. In September, the IRS put into action a return-matching program for businesses. Using Forms 1120, 1120S and 1065, businesses will need to provide the IRS with all business return income information to math to the business tax return.
Businesses will also be receiving Form 1099-K, the Merchant Card and Third Party Network Payments. This new form gives businesses to provide information on third party income from debit cards or PayPal for example. The separate forms have been created to avoid confusion in income reporting.
Recently, the IRS announced that it will begin to contact businesses which they suspect have smaller return reporting on actual income. There will be four compliance initiatives which will initially send out about 20,000 letters to U.S. small businesses.
*A notice to let a business be aware to review reported information more closely- Letter 5035
*A notice of possible audit – Letter 5036
*A notice similar to the CP2000 automated underreporter program – Letter 5039
*A notice to review information accuracy – Letter 5043
Local Certified Public Accountants are ready to help small businesses prepare 2012 taxes. If your business is one which has received one of these letters, your CPA is going to provide trusted assistance to act appropriately to any notice received.
If your business receives Letter 5035, you will want your CPA to review the accuracy of your tax return in comparison to the information provided on the notice. It is a “soft” notice by the IRS to let you know that you are in their sights, but they are not taking any further action at the moment. Call it a warning for you to better prepare your tax return for 2012. The business does not need to respond to the IRS, but will want to get with their CPA for a head start on the next tax return.
A business which receives Letter 5036 will need to review the same information as above but will also need to respond to the IRS with an amended return. Local CPAs are prepared to help respond to the appropriate situation addressed in the notice. It is imperative to respond within 30 days of receiving this notice to prevent an IRS audit from occurring. You may be asked to provide one or more of the following: a description of inaccurate information listed on Form 1099-K, provide receipts along with an amended return and include an explanation. Your tax specialist will be of great assistance in preparing these documents.
When the Letter 5039 arrives to your business, an immediate response for Form 144420, Verification of Reported Income will be requested. You and your CPA will have 30 days to prepare and send a response from your business. Once this information has been received by the IRS, you may receive one or more actions to comply with thereafter.
*The IRS may request additional information.
*The IRS may make an adjustment to the taxes which are due.
*The IRS may dismiss the case.
*If the IRS receives no response, you may receive notice for additional tax assessment or audit.
A business which receives Letter 5043 will need to get with their tax specialist and review information for accuracy an file an amended return if necessary. Within 30 days, you will need to provide a response which addresses the inaccurate information on Form 1099-K, there may be additional taxes due, there may be nothing more to do; or if there is no response prepared by the business, there may be an audit or additional tax proposed by the IRS.
Whenever you receive a notice form the IRS requesting information, you will want to do this promptly and with the assistance of your local Certified Public Accountant. Using an expert will help your business work through the issues with the IRS to lessen any potential future tax return problems.
Article Source: http://www.abcarticledirectory.com
Chris Reeder and Associates Certified Public Accountants is conveniently located in Murrieta, California, but our entire staff of accountants, CPA’s and personal or business tax service professionals frequently visit our client’s at their location. So, if you can’t come to us, we’ll certainly come to you.
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