{"ok":true,"canonical_url":"https://dealroom.so/glossary/tax-audit","api_url":"https://dealroom.so/api/public/glossary/tax-audit","data_freshness":{"sba_records_through":"2026-05-31","fdic_records_through":"2026-03-31","dealroom_last_updated":"2026-06-15","timezone":"America/Chicago"},"source_summary":["Public SBA 7(a) loan records","FDIC institution data","DealRoom lender and franchise enrichment"],"term":{"slug":"tax-audit","term":"Tax Audit","group":"Reading the business","definition":"This is an examination by tax authorities to verify the accuracy of a business's tax returns. It can uncover financial discrepancies or liabilities that impact the deal.","what_it_means":"A prior tax audit on the seller's business could indicate past financial issues or aggressive accounting practices. During due diligence, review all tax returns and be wary of any red flags that might suggest unreported income or undisclosed liabilities. This helps you assess the true financial health.","url":"https://dealroom.so/glossary/tax-audit","official_sources":[],"related":[{"slug":"tax-liability","term":"Tax Liability","url":"https://dealroom.so/glossary/tax-liability"},{"slug":"due-diligence","term":"Due diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"irs-transcripts","term":"IRS transcripts (4506-T)","url":"https://dealroom.so/glossary/irs-transcripts"},{"slug":"profit-and-loss-statement","term":"Profit and Loss Statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"}],"related_questions":[{"question":"What if the business I'm acquiring has pending tax audits or unresolved tax issues?","url":"https://dealroom.so/sba-7a/questions/what-if-the-business-i-m-acquiring-has-pending-tax-audits-or-unresolved-tax-issues"},{"question":"What documentation demonstrates a lender's adherence to prudent lending standards during an SBA audit?","url":"https://dealroom.so/for-lenders/questions/what-documentation-demonstrates-a-lender-s-adherence-to-prudent-lending-standards-during-a"},{"question":"How does the SBA typically review a lender's loan file in the context of a secondary market audit?","url":"https://dealroom.so/for-lenders/questions/how-does-the-sba-typically-review-a-lender-s-loan-file-in-the-context-of-a-secondary-marke"},{"question":"Do unfiled tax returns or overdue taxes prevent SBA approval?","url":"https://dealroom.so/sba-7a/questions/do-unfiled-tax-returns-or-overdue-taxes-prevent-sba-approval"},{"question":"Are business life insurance premiums generally tax deductible for the company?","url":"https://dealroom.so/sba-7a/questions/are-business-life-insurance-premiums-generally-tax-deductible-for-the-company"},{"question":"What if a business applicant has outstanding federal tax liens or delinquencies?","url":"https://dealroom.so/for-lenders/questions/what-if-a-business-applicant-has-outstanding-federal-tax-liens-or-delinquencies"}]},"caveats":["Definitions represent DealRoom's plain-English interpretation for buyers; verify regulatory terms against the official SBA and eCFR sources listed.","Not legal, tax, or financial advice, and not an SBA eligibility determination."],"citation":{"label":"DealRoom.so Glossary — Tax Audit","url":"https://dealroom.so/glossary/tax-audit","source_type":"DealRoom Data"}}