Should you attend your own IRS audit?

SHOULD you attend an IRS audit? Yes, I mean, you – your own  audit. Well, you don’t have to. This is always a strategic question that should be discussed at the planning stage 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, your audit.

Why you should not attend:

1. You won’t enjoy it, before, during, or 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 pick a fight with your mate. Personally, my philosophy has always been: sign a power of attorney, pay your accountant to handle this whole thing, and go on with your life – 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 is afraid if he/she is not hiding anything. Some auditors act naïve or have been on this job for so long that they have  become cold and insensitive.

3. You can be emotional (and should be) about issues raised by the agent. This can create animosity that raises the temperature in the room, one that can work against you.

4. Some taxpayers tend to be chatterboxes when they get nervous. Others appear cool from our coaching but talk-a-talk as soon as they get comfortable. They volunteer more than what is asked for. This could only mean trouble: more issues, mas problemas.

And just between you and me, I cannot work my magic when you are around. The auditor tends to be formal. I tend to be formal. I dare not trade issues when you are there. Your presence is 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 convincing witness. You present yourself rather well even in times of adversity. You are a convincing fellow.

2. You are a credible witness and your presence helps win the case.

3. You exude an aura of your trustworthiness and your presence is crucial to win the battle.

4. Evidence has been lost and your oral testimony can sway the auditor to believe that such evidence truly existed.

If you are this type of person, consider attending. But in my three decades of practice, you are 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 time of your life. Good luck!

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Sy Al-os Accountancy Corporation provides accounting and tax services to individuals, corporations, LLCs and business entities. The Firm has a niche in defending taxpayers audited by the IRS and other governmental agencies. The firm celebrates its 38th anniversary in 2015.

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Victor Santos Sy graduated Cum Laude from UE with a BBA and from Indiana State University with an MBA. Vic worked with SyCip, Gorres, Velayo (SGV – Andersen Consulting) and Ernst & Young before establishing Sy Accountancy Corporation in 704 Mira Monte Place, Pasadena, CA 91101. He has 50 years of experience in accounting, consulting, and tax work.

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The Firm proudly welcomes Arlene Al-os in 2015. She obtained her bachelors of Science in Accountancy from Mindanao State University and MBA from Ateneo de Manila University. She teaches intermediate accounting at UCLA and was a professor of Economics at Asia Pacific College. She has over 15 years of experience including member firms of KPMG and BDO Seidman accounting firms.

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Our readers may call (626) 744-0200 or email tax questions to info@victorsycpa.com. Please visit our website for about 300 tax tips at www.victorsycpa.com. 

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