A Look At Common Audits In The United States

Written by Chris on . Posted in Business advisory services, Corporate audit and assurance services, Corporate audits

As any accountant here in the United States likely knows, audits are incredibly common both here as well as overseas. After all, audits really do come in all shapes and sized. From the SEO compliance audit to SEC compliance audits in China to many other types of audits, the use of business advisory services in China as well as in the United States (and many other parts of the world where the United States does business) are hugely important.

After all, the IRS, the organization that conducts these audits such as the SEO compliance audit, has free reign over who they choose to audit. When it comes to business tax returns, any business tax return within three years of filing can be subject to an audit at the hands of the IRS. In many ways, this is how corporate audits and the typical SEO compliance audit (among many other types of audits too, of course) originally occur. If back taxes are found to be owed, they can be collected for up to a decade before falling outside of this statute of limitations, so to speak.

And the IRS certainly does conduct many audits such as the typical SEO compliance audit on a yearly basis here in the United States and for its many businesses that can be found abroad as well. Over the course of just one year, as many as one million businesses will be audited all throughout the country – more than one million business, actually, to be a little bit more specific. Over this period, nearly $3.5 trillion in taxes will be collected, though nearly $500 billion will be returned to businesses and citizens of the country in tax returns.

Fortunately for many a small business, however, is the fact that it is primarily large businesses that face audits such as the typical SEO compliance audit (among many others) from the IRS. In fact, small businesses in the United States have a less than 1% chance of being audited if they have returns of less than $10 million. If they have larger returns filed, than it is likely that a tax audit has a better chance of happening – however, it is still nowhere near as common as it is for businesses and corporations of a significantly larger scope and scale.

Larger companies, corporations, and businesses, on the other hand, are much more likely to experience a tax audit by the IRS at least once. In fact, the data that has been gathered for the tax season of 2017 shows that the vast majority of tax audits happened to these larger business ones – a great majority, in fact. If a balance sheet showed a value of $20 million or even more, the rate of audit rose to as much as 60%, meaning that the company was more likely to be audited than it was not likely to be audited.

By and large, individual taxpayers are not audited at all. In fact, those that had a balance sheet with values less than half of a million had less than half of a percentage of a likelihood of experiencing an audit from the IRS. And while it is certainly possible for an individual person to be audited by the IRS, it is safe to say that the vast majority of us will never be.

But from the SEO compliance audit to other types of audits, professional accountants can help businesses of various sizes through the process of undergoing an IRS audit, something that can be relatively stressful, depending on the circumstances that are at hand. Fortunately, the filed of accounting is one with an incredibly long history, dating all the way back to Mesopotamian times according to some scholars, so accountants have a long history of helping people and businesses in such situations and oftentimes very much know what strategies work and which ones do not.

In general, tax season can be stressful for many different people, both on an individual level as well as in conjunction with the possibility of facing an audit when working at a large business or corporation. Smaller businesses, on the other hand, need not worry.

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