Audit Defense by Tri-Merit

Sometimes the best defense is a good offense.

While audits can’t always be avoided, they don’t have to be scary. With proper planning, a sound methodology, and an experienced team working on your behalf, you can feel confident and prepared to defend your position should an audit occur. Tax audit defense is included with every Tri-Merit study, so we will be by your side the entire way.

The Tri-Merit team combines a detailed understanding of the engineering-based tax credits you’re seeking with technical expertise that reaches beyond your financials. The goal is to get you the largest return possible without inflating or overestimating your credit simply for short-term gain.

Audit Defense by Tri-Merit

When the IRS comes knocking at your door, you have to be prepared to defend what’s written on your tax returns. An IRS audit examines your financial information to check if the reported amount of taxes is correct. It may sound like a simple review, but an audit scrutinizes an engineering firm’s finances extensively to uncover mistakes. If it reveals that the firm has misreported its taxes, it must return the amount that you owe and possibly face heavy penalties.

An IRS audit doesn’t automatically mean a mistake was made; some engineering firms with clean tax records still catch the eye of the IRS.

As such, the best way to avoid an audit (and the negative consequences that come with it) is an accurate, ironclad tax return. By reporting the proper taxable amount, engineers reduce their chances of triggering an IRS audit. Moreover, if the business does get selected for an audit, the management doesn’t have to worry; they should possess all the documentation needed to substantiate the company’s claims.

Tri-Merit gives you the peace of mind that your tax records hold up against the most stringent IRS audits. With strict attention to detail and a firm grasp of qualified activities for engineering-based tax credits, our team will defend our work during an IRS audit.

The Odds of Getting an IRS Audit

While companies dread the possibility of an audit, the chances of undergoing one are low. In fact, in 2018, the IRS audited only 0.5% of the 196 million tax returns it received. As such, the odds of being selected for an IRS audit is 1 in 200.

It doesn’t mean, however, that engineering firms should be complacent. Certain characteristics make a business more likely to be audited than the rest. For instance, failing to report a part of its income may catch the attention of the IRS, so does claiming too many charitable donations. Reporting too many losses on Schedule C (if you or your client is self-employed) and deducting too many business expenses also raises the chances of triggering an audit.

So, to maintain clean records with the IRS, you need 1) accurate calculations for tax claims and deduction and 2) an ironclad defense should an audit occur.

Tri-Merit provides these with every service.

Tri-Merit Minimizes Your Risk

If you obtain services from Tri-Merit (engineering R&D tax credit, cost segregation, etc.), you will receive audit defense services in case of an IRS audit. We’ll pool the resources needed to substantiate your claims and deductions.

Should an audit occur, our team helps you:

  • Respond to audit notices
  • Prepare a detailed report on IRS documents
  • Prepare witnesses for interviews or testimonials
  • Defend yourself during audit hearings or meetings with auditors

To learn more about our audit defense strategies for engineering firms, get in touch with our team.

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Tri-Merit produces highly successful and sustainable results to reduce your risk of audit.

From the beginning of your engagement with Tri-Merit, you’ll feel confident that our team is working on your behalf to ensure:

  • proper processes are followed
  • IRS guidelines are met
  • all reports and documentation are clear, concise and meticulously detailed to substantiate every claim

If you’re taking an incentive for the first time on a timely filed return, your odds of being audited are really no higher than if you weren’t taking the incentive. However, if you’re amending returns to claim credits that you didn’t previously realize you qualified for, you can expect the audit rate to go up. This is logical as you are essentially writing a letter to the Treasury asking for a refund.

By developing a sound methodology for calculating a credit and putting in place strategies to ensure the information and documentation gathered improves over time, you dramatically improve your ability to successfully deal with an audit should it occur.

Sound methodology and the right team positions you to handle the audit process.

Should an audit occur, Tri-Merit will do what it takes—at no additional cost to you—to defend your tax credit claim and dramatically improve the odds of retaining the savings your company deserves.

Ready to learn more? We’re here for you.