Why Do You Need The Protection Provided By Audit Insurance?
As its name implies, audit shield means a protection against tax audit. Your accountant will usually offer an audit protection insurance so that you will not needlessly worry about the substantial costs that can be generated by an IRS audit. Without the protection of insurance, you will have to face a considerable amount of professional fees.
Tax audit almost always appears on the list of what people fear most to happen within their lifetime. However, when you receive a notice that says your tax returns will be audited; keep your calm and look for representation if you haven’t any. Your representative will appear in front of IRS on your behalf.
It is typical for accounting firms to offer audit insurance to their clients but this does not mean that the audit process will go away. Insurance will not erase the legitimate taxes you owe the government and neither will it eliminate your liability. Many people assume that if they purchase audit insurance, they can afford to exaggerate a little bit with their tax returns; but it does not work that way.
If you do not have the right paperwork that will support a deduction that IRS is questioning, it cannot be erased by audit insurance because it only pertains to the considerable costs that will be incurred in proving that your tax returns are legitimate.
Audit insurance usually covers a specific tax return but it will last as long as the tax return is auditable. In simple terms, this means that if the previous tax returns for the last 3 years are subjected to audit, they are still covered by the audit insurance.
However, your worries about a tax audit may be unfounded. The likelihood of being audited is pretty low particularly if you made sure of the accuracy of your returns. It is usually errors that trigger an IRS audit.
In order to gain peace of mind that you will not go bankrupt from the substantial fees of a tax audit, your best option is audit shield that is available to accountants and their clients. Business and individuals have grabbed the opportunity to have protection; how about you?