SHOULD you attend an IRS audit? Yes, I mean, your audit. Well, you don’t have to. This is always a strategic question that should be discussed at the planning stages of an audit. Of course, you do not want to go. Of course, I do not want you to go either. So why go?
Let’s discuss the benefits and drawbacks of attending your own funeral, I mean audit.
Why you should not attend
1. You won’t enjoy it, before, during, and after the examination. It is normal to get rattled. It is normal to be affected in some way, including the way you eat, sleep, or work. You might get testy and may even fight with your mate. Personally, my philosophy has always been: sign the power of attorney, pay me, let me handle this whole thing, and go on with your normal life.
2. If you attend, your demeanor may convey fear that may be misconstrued by the auditor that you are hiding something. I have dealt with auditors who ask me why my client should be afraid if he/she is not trying to hide anything. Some auditors have been doing this job for so long that they have become cold to taxpayer sensitivities.
3. You can be emotional (and should be) about issues raised by the agent and can create animosity that changes the atmosphere in the office audit, one that will probably work against you.
4. Clients tend to be chatterboxes when they get nervous. They volunteer more than what is asked. This could only mean trouble: more issues, more dinero.
And just between you and me, I cannot work my magic to settle when you are there. The auditor tends to be more formal and righteous. I tend to be more formal and righteous. I do not want to trade issues when you are there. You are therefore a hindrance to my effectiveness, an obstacle to the agent’s willingness “to work it out.” So why attend?
Why you should attend
1. You are a believable witness. You present yourself rather well even (or especially) at times of adversity. In other words, you are rather convincing, perhaps more than your rep.
2. You are a credible witness and your trustworthiness and presence are crucial to win your case.
3. Evidence has been lost and your oral testimony can sway the auditor to believe that such evidence existed.
If you are this type of person, consider attending. But in my 34 years of practice, this is indeed a rare creature that comes around once in a blue moon. My advice is, unless you are that rare breed, sign that power of attorney and leave it to the professionals. Try to be “normal” at this of your life. Good luck!
* * *
Victor Santos Sy, CPA, MBA, provides professional services in accounting and tax controversy including IRS audit defense and offers in compromise. He also advises clients on choices of entity including corporations for small businesses and LLCs for rentals. Vic worked with SyCip, Gorres, Velayo (SGV - Andersen Consulting) and Ernst & Young before establishing Sy Accountancy Corporation at 704 Mira Monte Place, Pasadena, CA 91101. The firm celebrates its 34th anniversary in 2011. You may email tax questions to Vic at This e-mail address is being protected from spambots. You need JavaScript enabled to view it . You are welcome to visit our website for about 300 tax tips at www.victorsycpa.com.
| < Prev | Next > |
|---|
