TaxMama’s Tax Quips and Audit No-Nos

Today TaxMama hears from a tax professional with a problem: “My client is being audited by IRS. I live in another state. She sent me the records and I asked IRS to move the audit to my state or to do it by phone. After she sends me the records AND after I ask IRS for a change of venue, I learn that my client had quite a chat with IRS – and they insist on conducting the audit at her place of business. What now?”

Dear Family,

Why am I bringing this question to you, instead of keeping this among the pros? Because it’s important for you to realize that you can jeopardize the success of your own audit.

Even when you have absolutely nothing to hide; even when everything you’ve done is on the up and up – do NOT EVER speak to IRS or any governmental agency before the actual audit. Except in the most minimal way.

You will be getting the audit invitation inviting you to schedule the audit appointment. Even if you think you’re going to be handling the audit yourself, do NOT have a conversation when you call to schedule the appointment. Simply schedule the appointment. Do NOT answer any questions. Do not get chatty and conversational. Be polite and reply that you or your representative will answer questions during the audit.

When you get an invitation to a field audit – in other words, one that takes place at your home or business – do NOT call IRS at all. Immediately get hold of a tax professional have them start the process for you. You never, ever want any government agent wandering around your home or place of business. Even when you’re a total angel, there’s always some silly, insignificant thing they can find and blow out of proportion.

In this case, this woman, who has nothing to hide, is terrified of having to interact with IRS. But she admitted to IRS, on the phone, that she has all her records at home, and that she has an adequate place for the auditor to use to conduct the audit in her home.

Frankly, I don’t know how to fix that at this stage to have the audit moved out of state. As a result, one of two things is likely to happen. She will either have to deal with the audit herself. Or she will have to pay several thousand extra dollars to bring her tax pro to her town, put him up in a hotel in order to have him present for the audit. It would have been easy for her pro to deal with in the beginning.

And remember, you can find answers to all kinds of questions about dealing with audits and other tax issues, free. Where? Where else? At TaxMama.com

[Note: If you were subscribed to the e-mailed TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the subscribe link and join us.]

File Download (0:00 min / 1 MB)

Leave a Reply