What to Expect in A Tax Audit

As 2023 unfolds, we are already seeing a slight uptick in federal corporate and small business tax return audits. Audits, or exams as they’re known within the accounting world, can come from the federal, state, local, or municipal level. In all instances, the burden of proof lies on the taxpayer.

We recently presented a webinar on the topic, which you can view here:

Highlights of the webinar include:

How Federal Tax Returns Are Selected for An Audit

The IRS uses several elements to determine whether to audit a tax return, including:

  • Computer Scoring
  • Participants in tax avoidance transactions
  • Information Matching
  • Related Exams
  • Other: local compliance projects, return preparers, market segments
  • Random selection

Types of Audits

If your return is selected, it will undergo one of these types of exams:

  • No IRS Contact Audits
    The tax returns are reviewed based solely on information already available to the IRS.
  • Correspondence Audits
    Generally less intrusive, these exams are typically conducted via mail with minimal phone contact.
  • Office Audits
    The IRS will obtain more information about the taxpayer using agency records and other resources, all prior to the exam, which will focus on “selected areas” of the return.
  • Field Audits
    The most comprehensive of exams, this is performed in the field. Each line of the tax return could be reviewed, and the taxpayer will need to provide substantiation.

What to Expect in a Field Audit

This is the process followed by the IRS for a Field Audit. We recommend involving your tax preparer in this process as their expertise will be key in making sure this process goes smoothly and that you are protected.

  • Notification by Mail
  • Information Document Requests (IDR): this will usually accompany the notification by mail.
  • Taxpayer Site Visit: this will take place at the business or residence – depending upon whether this is an audit of business or personal taxes – to make verifications of certain claims.
  • Taxpayer Interview: this is generally a one-to-two-hour process, interviewing the taxpayer and their representative.
  • Place of Exam: we recommend this takes place at your tax preparer’s location or at a private, neutral location.
  • Proposal to Close
  • Appeal, if necessary, based on the IRS agent’s findings.

It is important to know that the IRS will correspond with you by US mail. They will never contact you by phone (not initially; phone calls may happen once an exam process has begun), email, or text message.

We recommend viewing this webinar in its entirety to learn more about ways you can prepare should you ever be selected for a tax audit.

One source, many services, the right decision.

If you have more questions about what to expect in an audit or if we can be of service, please contact us online or call 215-723-4881.

Meet the Newest Members of the Canon Capital Management Group Team

We have recently welcomed these professionals to our team. Some of these faces may be familiar to our clients who are already working with them, but we wanted to make sure we gave Lori, John, Laura, and Daniel a warm welcome.

Lori E. Benner, Senior Accountant

Lori E. Benner is a Senior Accountant with over 30 years of experience in corporate and partnership tax preparation and financial statement review.

Lori E. Benner









John Castro, Technologies Tech Support

John Castro is a graduate of Chestnut Hill College. When he’s not getting our clients’ tech up and running, you can find him surfing and snowboarding.

John Castro









Laura Eisenschmied, Bookkeeper/Administrative Support

Laura Eisenschmied is a bookkeeper and certified QBO Pro Advisor. In addition to providing bookkeeping services to clients, she is an integral asset to our tax season process.

Laura Eisenschmied









Daniel Hagen, Staff Accountant

Daniel Hagen is a Staff Accountant who began his accounting career in tax preparation. Currently pursuing his CPA, he is a graduate of Temple University.

Dan Hagen









Learn more about our Canon Capital Management Group team and how they might be of service to you.

Andrew Shapowal Earns Personal Financial Specialist (PFS) Credential

Please join us in congratulating Andrew Shapowal, CPA/PFS, AIF® on earning the Personal Financial Specialist (PFS) credential. The PFS credential distinguishes CPAs and enhances their credibility by showcasing their proficiency in personal financial planning. Andrew, who also holds a Certificate in Blockchain and Digital Assets, is an Investment Advisor & Digital Asset Specialist in our Wealth Management business unit.

If you have any current needs regarding digital assets, your investments, or retirement plans, please feel free to contact our Wealth Management department via phone at 215-723-4881 or online.


Webinar Recording: 87,000 New IRS Agents – Now What? What to Expect in an IRS Audit

If you were unable to attend our recent webinar, here is a recording you can watch at your convenience.

During this session, Steven Moyer, CPA/PFS, CGMA, CSEP and Brent Thompson, CMA, CGMA, CPA presented the latest information on how to prepare for a tax audit, including:

  • The current state of the IRS
  • Records and retention
  • Items that can cause an exam
  • Basic procedures in an exam
  • Options upon exam conclusion
  • Impact of year-end legislation, if any

As always, if you have any questions we are happy to be of service. Please call us at 215-723-4881.

New for 2023: Minimum Wage, W4, and IRS Mileage Updates

It’s a new year which means changes to the minimum wage in New Jersey and Delaware, a new form W4, and updated IRS mileage rates.

Minimum Wage Increases in New Jersey and Delaware

Starting January 1, 2023, many employees in New Jersey making minimum wage will receive an increase of $1.13 per hour, bringing their new hourly wage to $14.13. This is not the case for all classifications of minimum wage pay. Per the State of New Jersey website:

The New Jersey Department of Labor and Workforce Development (NJDOL) sets the minimum wage for the coming year using the rate specified in the law or a calculation based on the CPI, whichever is higher. Once the minimum wage reaches $15 per hour, the State Constitution specifies that it continue to increase annually based on any increase in the CPI.


Under the law, seasonal and small employers were given until 2026 to pay their workers $15 per hour. The minimum hourly wage for these employees will increase to $12.93/hour on Jan. 1, up from $11.90.


Agricultural workers are guided by a separate minimum wage timetable and were given until 2027 to reach the $15/hour minimum wage. Employees who work on a farm for an hourly or piece-rate wage will see their minimum hourly wage increase to $12.01, up from $11.05. Additionally, long-term care facility direct care staff will see their minimum wage rise by $1.13, to $17.13.


Tipped workers’ cash wage will increase to $5.26/hour, with employers able to claim an $8.87 tip credit, an increase in the maximum allowable tip credit of $1. If the minimum cash wage plus an employee’s tips do not equal at least the state minimum wage, then the employer must pay the employee the difference.

In Delaware the minimum hourly wage has increased by $1.25 to $11.75, with exemptions for employees working in the following areas:

  • Agriculture
  • Domestic service in private households
  • United States Government employees
  • Sales personnel receiving outside commission
  • Executives, Administrators, and Professionals
  • Employees in fishing and fish processing (while at sea)
  • Volunteer workers for educational, religious, or non-profit organizations
  • Junior Camp Counselors working for non-profit summer camps
  • Inmates in Department of Correction work programs

According to the Delaware Department of Labor, the following is the protocol for tipped employees:

The minimum cash wage payable to employees who receive tips is $2.23 per hour. Tips may not be taken or retained by an employer except as required by law. Tip pooling is permitted (under certain circumstances) in an amount not to exceed 15% of the actual tips received by the employee.

A New W4 for 2023

The IRS has issued the new W4 form for 2023. We recommend doing a Paycheck Check-up at the start of every calendar year so you can make any necessary adjustments to your withholdings.

IRS Mileage Updates for 2023

As of January 1, 2023, the IRS standard mileage rates for the use of a vehicle (car, van, pick-up truck, or panel truck, whether electric, hybrid-electric, gasoline, or diesel) for business, charitable, medical, or moving purposes are:

  • 65.5 cents for every mile driven for business use
  • 22 cents for every mile driven for medical or moving purposes for qualified active-duty members of the Armed Forces
  • 14 cents for every mile driven in service of charitable organizations

We recommend tracking your mileage throughout the year using an app like MileIQ. It can save you time and hassle in the long run, as we discuss in this blog post.

We’re Here to Help

If you have any questions about these updates or any other payroll or accounting matter, please don’t hesitate to call 215-723-4881 or contact us online.

Canon Capital Technologies: Three Things to Do Before Year-end

We continue our year-end checklist series with these suggestions from our Technologies team.

  • As tax season approaches, tax scams will be on the rise! Keep an eye and ear out for suspicious emails and calls, especially those that you aren’t expecting.
  • Watch out for social media ads that lead you to fake online stores. If it sounds to good to be true, it just might be. Trust your instincts.
  • Year-end Cleanup: now is a good time to go through documents filed on your computer or cloud storage and to clear out the unneeded pictures and videos from your smartphone and tablet.

Staying Safe in 2023

Stay safe online by using a password manager. If you don’t have one, now is the time to take action. We recommend Bitwarden. If you are using a password manager, it’s a good idea to change your master password and review your settings.

If you have any questions about these items or other aspects of your IT needs, contact us online or call 267-381-2025.

Canon Capital Wealth Management: Three Things to Do Before Year-end

With the end of 2022 quickly approaching, we wanted to remind you of a few actions you might consider taking to make the most of your finances.

  • A down market is a great time to make the maximum contribution to your retirement account. Confirm your limits based on your income and plan type and check with your CPA, then make a one time pay deferral or contribution.
  • Required Minimum Distributions (RMDs) must be out of your account by 12/31/22. With the holidays delaying processing times, be sure you’ve taken enough out early. If you gift to charity, make sure they cash checks prior to year end. Inherited accounts may also have requirements – speak with your advisor and be sure you’re taking what you need.
  • Investment markets are a leading indicator in economics; this means the current recession fears may already be ‘priced in’ allowing a little hope for year-end values to recover.

Looking ahead to 2023

Keep in mind, the annual contribution limits for 401(k)s, IRAs, and ROTH IRAs is going up in 2023. If you have automatic pay withholdings or bank transfers, check the new limits (and your income eligibility) and increase your amount. A slight monthly increase will be less noticeable than catching up at the end of the year.

As always, we are here to help. If you have any questions, please contact us online or call 215-723-4881.


Holiday Hours

We hope you are looking forward to a festive holiday season. Here is our holiday schedule:

  • Tuesday, December 20: Lobby closing at noon for our staff luncheon (staff may be available with an appointment)
  • Friday, December 23: Office closing at Noon
  • Monday, December 26: Office closed for Christmas holiday
  • Friday, December 30: Office closing at Noon
  • Monday, January 2: Office closed for New Year’s Day holiday
We wish you and your family a safe, happy, and healthy holiday season.

Join us for a Webinar – 87,000 New IRS Agents, Now What?

The Inflation Reduction Act included the hiring of 87,000 new agents at the IRS. With that addition of staff comes the expectation that the number of tax audits (exams) will increase.
Please join us Wednesday, January 25, 2023, via Zoom for a session with Steven Moyer, CPA/PFS, CGMA, CSEP and Brent Thompson, CMA, CGMA, CPA as we discuss what this could mean for you and your business. Topics will include:
  • The current state of the IRS
  • Records and retention
  • Items that can cause an exam
  • Basic procedures in an exam
  • Options upon exam conclusion
  • Impact of year-end legislation, if any
This event is free of charge but you must register to receive the Zoom link. Please register here by January 24, 2023. After registering, you will receive a confirmation email containing information about joining the meeting.