Internal Revenue Service to get tougher
Most people fear an Internal Revenue Service audit but starting in January the IRS will start setting strict deadlines for compliance with its Information Document Requests (“IDR”).
While those deadlines currently do not exist, for wealthy taxpayers and companies with more than $10 million in assets, the deadlines will apply. Initial IDRs will not be under a strict guideline. But if the initial deadline is not met, then under the new policy, a 49-day clock will start ticking.
After two warnings, a 49 day warning goes into effect. If the information still is not divulged, the agency will go to federal court to seek a summons. This step could expose the audit to the public and pose a risk to investors because the existence of an IRS summons can signal IRS trouble for a company, risking a blow to investor confidence and ultimately the share price.
The compressed timeframes can yield uncertainty and there will be more court cases involving summons enforcement.