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.
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