Importance Of Audit Insurance And Points To Keep In Mind Before Selecting A Policy

Insurance against tax audit is relatively a new product in insurance sector. The product is aimed at tax accountants who might sometimes make errors while preparing the returns of their clients, which might attract a tax audit. The insurance covers all the expenses incurred by the client to face the tax investigation.

The ATO picks up tax returns randomly for an audit. You may get a call from the tax office even if your returns are accurate and you have paid all your taxes. Claiming huge deductions and charitable contributions, conducting huge number of cash transactions, showing less income are some of the reasons a tax return may attract an audit procedure. Having the protection of tax audit insurance helps the accountants and their clients to complete the process of filing returns in a stress free manner.

Getting through the tax audit consumes a lot of time and money. The services of a huge number of professionals such as accountants, lawyers and accountants are required to get through a tax audit successfully. As audits take many years to complete, the costs may rise with astronomical effect. Opting for tax audit insurance covers all these expenses and takes off the financial burden.

While purchasing a tax audit insurance cover, keep the following points in mind

  1. All tax insurance covers are not the same. The definition of tax review changes from policy to policy. It is always advisable to go through the fine print of the policy before buying it. It will enable you to know the different types of scenarios, covered by the insurance policy.
  2. Some tax audit insurance policies only cover the accountant and not your business. Be careful while selecting a tax audit insurance policy and choose a policy that covers your business along with the accountant. This will help you to cover all the costs apart from the accountant’s charges.
  3. Most of the accountants offer tax audit insurance as part of their service contract. It protects the accountant and the client from the mistakes made while filing tax returns. Choose a policy that offers a good coverage depending on the size and nature of your business.
Share This:
Share