The IRS can impose penalties if a tax return is not timely filed or if a tax liability is not timely paid.
In order to claim any deduction, a business owner, like any taxpayer, must prove two things: what expenses were for and that the expense was in fact paid or incurred. Supporting documents may include sales slips, paid bills, invoices, receipts, deposit slips, and canceled checks.
There are special record keeping requirements and strict documentation rules for certain expenses including expenses for travel away from home, meal and entertainment expenses, business gifts, and, cars and other means of transportation.
Top 10 litigated tax issues are Code Sec. 6662 accuracy-related penalty, trade or business expenses, summons enforcement, gross income, appeals from Collection Due Process (CDP) hearings, failure to file penalty and other penalties, civil actions to enforce federal tax liens, charitable deductions, frivolous issues penalty and innocent spouse relief.
Your accountant should be well-versed in several disciplines, including but not limited to generally accepted accounting principles, corporate and individual tax, retirement planning and financial planning.