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What should a company do if it receives a tax audit or accounting adjustment notice from the State Taxation Administration? Do these 7 things before the initial explanation.
Before your first response to a notification from the IRS, do these seven things: First, confirm the notifying authority, tax category, year, reason for investigation, and scope of required information. Don't rush to explain transactions from memory; first, connect the contracts, invoices, ledgers, payments, and actual performance. Confirm whether the IRS is truly questioning revenue, costs, input tax credits, related-party transactions, or the authenticity of the transactions. The company's finance department, accountant, and legal counsel must use the same set of objective facts; do not provide conflicting versions of events. Do not delete, create, backdate, or modify original transaction documents and electronic records. If the investigation involves false documentation, fictitious transactions, tax evasion, or liability of company officials, simultaneously assess administrative penalties and criminal risks. Before attending the questioning, confirm whether you need a lawyer, accountant, or other representative/assistant. Many company tax disputes don't begin with receiving a tax penalty. The real starting point may simply be a letter…
