If you have received a Notice of Selection for Examination (Letter 2205-D), this means that the Internal Revenue Service (IRS) is preparing to audit your partnership. It also means that you need to get prepared. Dealing with an IRS partnership audit can be a time-intensive, resource-intensive and high-risk process. As a result, partnerships need to ensure that they do everything they can to minimize their risk of facing unnecessary assessments, interest and penalties.

The federal Paycheck Protection Program (PPP) and Employee Retention Tax Credit (ERTC) were supposed to serve as financial lifelines during the COVID-19 pandemic—and they did for many businesses. But, fraud under both of these programs also proved to be a significant issue, with conservative estimates putting the total cost of PPP and ERTC fraud in the tens of billions of dollars.

The Employee Retention Credit (ERC) was a limited-time credit offered to qualifying businesses for the 2020 and 2021 tax years. Unfortunately, similar to the Paycheck Protection Program (PPP) and other pandemic-relief programs, the ERC proved to be a target for widespread fraud. As a result, the Internal Revenue Service (IRS) has been scrutinizing the returns of businesses that claimed this refundable credit—and it is continuing to do so in 2023.

Tax mistakes are common. But that does not make them okay. Taxpayers who make mistakes can face audits, interest and penalties, and these can all substantially increase the cost of federal income tax compliance.

If you are a New Jersey resident but you spend time working abroad, it is important to make sure you have a clear understanding of your obligations to the Internal Revenue Service (IRS). While U.S. citizens working abroad can exclude foreign-earned income from their taxable income in some circumstances, reporting and payment violations are common—and these violations can trigger IRS audits and steep penalties.