The Challenge: A small business selling physical goods online miscalculated their Cost of Goods Sold (COGS). They deducted the cost of all inventory purchased during the year, rather than just the inventory that actually sold, triggering an IRS audit letter. The Moorhead Financials Solution: * We managed the audit correspondence entirely, shielding the client from IRS agents.
- We reconstructed their end-of-year inventory valuation, corrected the COGS, and applied previously missed shipping and packaging deductions to offset the difference. The Result: We satisfied the IRS audit with no additional penalties and actually uncovered missed operational write-offs that resulted in a $15,300 IRS tax refund from a prior amended year.