On Wednesday, June 22nd NTU’s President Pete Sepp testified before the House Subcommittee on Economic Growth, Tax and Capital Access Committee on Small Business regarding IRS small business reforms. Pete was one of four witness including Mr. Lee Davenport a member of Electronic Tax Administration Advisory Committee, Mr. Roger Harris the President and COO of Padgett Business Services, and Ms. Emily Peterson-Cassin the project coordinator of Bright Lines that testified before Congress on behalf of small business owners and taxpayers IRS audits.
Sepp highlighted the unfortunate reality that small businesses are the most likely to be audited by the IRS. According to IRS.gov an audit is “a review/examination of an organization's or individual's accounts and financial information to ensure information is being reported correctly, according to the tax laws, to verify the amount of tax reported is substantially correct.”
What the IRS doesn’t include on their website is how much anxiety, intimidation, and uncertainty accompanies an audit. Once audited it is difficult to comprehend the non descript language.
During Sepp’s testimony he stated the need for personal interaction and responsibility throughout the audit process. Without a contact or representative the process becomes protracted for no particular reason other than lack of clarity. A major issue outlined in Sepp’s testimony is the small response rate for returning auditees phone calls. Only 38% of callers seeking help and attention receive that assistance. Many small businesses overall ability to function is compromised in the midst of an audit due to stress and confusion of the approach. The IRS audit process is one that needs reform and attention from the President and Congress in order to modify the IRS’ stigma.