Attending an Office or Field Audit
The big day has arrived. Before leaving for the audit — or before the revenue agent arrives at your home office— take one last look at your documents and do an inventory of the receipts and records you have for the audit.
How to prepare for your tax audit
If you are heading to the IRS for an office audit, give yourself plenty of time to arrive punctually and start off on the right foot. Otherwise, you risk irritating the auditor and giving a general impression that you don’t take the IRS very seriously. Approach the audit as you would any business meeting, because to the IRS office auditor, your audit is strictly routine. If the IRS suspected you of any real wrongdoing, you would be meeting with the criminal investigators, or at least have been hit with a field audit.
Your clothes should be in keeping with your job and station in life. Anything else looks and feels odd—and an audit is uncomfortable enough already. Don’t wear your Sunday best if you work at Burger World or dress like a fry cook if you are a dentist. If you are a bus driver coming from work, wear your uniform. It’s simple, really—be yourself.
Office auditors keep pleasantries to a minimum due to a tight time schedule. IRS district offices set two audits per day for small business owners or four for wage earners. Expect your audit to last from one to four hours. Auditors must write up their findings between appointments, so they keep moving. The auditor generally starts with background questions, such as, “Are you married?” or “Where do you live?” Then the auditor starts questioning in earnest.
If you’re facing a field audit and the IRS auditor is coming to your place, be ready. Have the documents out and in order. Preparation is the key to winning most audit issues, meaning that your papers should be organized beforehand.
Chances are you are self-employed, so you want the revenue agent’s first impression to be that you are a careful businessperson. Most revenue agents prefer that you address her or him as Ms. Lui or Mr. Hernandez, and not as Christine or Mark. Offer coffee, tea, or a soft drink as you would to any business guest you are about to meet with. The revenue agent knows you don’t want to be there, so don’t put on a phony chummy front—but don’t complain, either. Consider the audit another cost of doing business, like paying your rent.
Who should attend the audit
You can attend the audit by yourself, bring a supporting cast with you, or stay at home and send a representative—such as a tax pro. There are many reasons why you might send a representative. The initial taxpayer interview is the most important phase of an audit to the IRS. You—not just your tax return— are under examination.
Your behavior is being observed.
- Will you act guilty?
- Will your answers sound evasive?
- Will you start to shake when some items are discussed?
If any of these describes you, it might be well worth hiring a tax pro to send to the audit in your place.
If you bring people along or send a tax pro, the auditor will require that you sign an IRS form waiving your right to privacy and allowing the other people to be present. The auditor will give this form to you at the audit. A tax pro must give the auditor a different form (IRS Form 2848, a copy of which is at www.irs.gov) to represent
you. You don’t have to disclose in advance that you’ll send someone else or will bring people along.
If you don’t send a tax pro in your place, consider bringing any of the following people with you:
- Employee – Your bookkeeper, manager, accounts payable supervisor, or anyone else with knowledge of your business records can help you explain them.
- Spouse – If a joint return is being audited, only one spouse must attend; certainly both can. If a tax return filed by only one spouse is being audited, the other can attend to provide support and comfort.
- Family member or friend – You can bring along anyone who will provide you with moral support, can translate if your English isn’t very good, wipe away your tears, stare at the auditor, or do whatever else might help.
Need help with your audit? Reach out to the tax law firm for a free 15-minute consultation with one of our tax attorneys. We represent clients nationwide have been helping clients stand up to the IRS for over 40 years.