You have probably heard about the Internal Revenue Service (IRS) when dealing with taxes and getting in touch with the taxable world. What’s more, if you are an eCommerce business seller who sells products in online marketplaces, then you probably heard about the IRS and its requirement to have a resale certificate. Long story short, knowing what the IRS is and how it works is essential for a seller who wants to have a leading role in the market. Our staff at Prestige auditors are ready to guide you through the perplexing world of business formation and taxes. Now let’s talk a bit about the IRS, its history, and how it works.
Historical Background
The Internal Revenue Service was established in 1862 by President Abraham Lincoln, and now, after more than 150 years, the agency operates under the direction of the United States Department of the Treasury. At the moment, one of the major functions of the IRS is the collection of individual income taxes, together with employment taxes.
How It Works
If you are an individual or a corporation that files taxes, nowadays it is possible to handle this process online, electronically. An interesting fact, most of the sellers are enjoying the benefits of technology, rather than spending time on the way to the final destination!
Every year, the Internal Revenue Service audits a portion of income tax returns; in other words, the IRS examines accounts and financial information. The purpose of audits is to ensure that the reported information complies with the tax laws. Moreover, they check if the reported amount of tax is correct. The individual or corporations that are being selected, often ask about the way the IRS chooses to audit them instead of others. The answer is that sometimes returns are selected based on a statistical formula devised specifically by the IRS. They compare the tax returns against “norms” for related returns.
The ones who are selected for the audit are properly notified by the Internal Revenue Service itself sending you an email, so make sure you check your inbox regularly. However, this doesn’t mean that the IRS conducts the audits solely via mail. It is possible that the audit will be managed through a face-to-face interview, which can be done not only in the Internal Revenue Service office but also in your home, business address or accountant’s office. The length of the audit is not a fixed number of days or months, instead, it depends on the complexity of the case, and the result can vary within these three options: no change agreed (the changes suggested by the IRS are agreed upon) and disagreed (IRS suggests changes: however, you disagree).
In short, The Internal Revenue Service is one of the most important figures of the tax world, which is why knowing more about it and its activities will only help you and your business. If you want to become an online seller and just realized that the IRS requires a resale certificate that exempts you from paying Sales Tax, we at Prestige Auditors will help you get one. Our tax exemption service will help you not only save some money but also avoid paying fines and penalties. Be safe, and spend your money on things that really matter!
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