Being chatty can destroy your rights and
you may say the wrong thing if you misunderstand a question.
Or even worse, you might get hurt if the auditor misunderstands
your answer. So once again, the best thing to do after telling
the auditor you will be happy to schedule the audit is to SHUT
UP! Never
allow the auditor to start your audit on the spot or without
giving you an opportunity to assemble your files and pull
your receipts out of storage. Typically they will give you
several weeks to get your files together.
Now
here’s a tax audit insiders secret: The approach outlined
above of responding politely but keeping a tight lip will
work roughly 75% of the time. BUT, about 25% of the time the
IRS auditor will play a little game I call Inspector Colombo.
Remember those old TV shows with Inspector Colombo? (I’m
sorry but I’m showing my age.) Colombo, whose signature
look was a disheveled trench coat, would always have “just
one more question.” That’s the game some IRS auditors
will play. It goes something like this:
You
say: “I will be happy to address any
of your questions and provide all required records when
we have our audit appointment. Let me review your audit
document request, and let’s schedule our audit
for say three or four weeks from now to give me a chance
to assemble my files from storage.”
The
IRS auditor responds: “No problem. I
just have a few questions right now for my records.
What is your current place of work? What banks do you
have accounts at? Please provide me your current home
address and all of your telephone numbers (home, work,
& cell)?
Wow!
You just got Colombo’ed! Here is your
answer to the Colombo style auditor from the IRS:
You
say: “As I mentioned I would be happy to address
any of your questions when we have our audit appointment.
I will not answer any questions at this time, before
I consult with my tax advisor. Good day.” (It’s
OK to then hang up the phone or politely close your
door if the IRS is at your home or business.)
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Now
please don’t misunderstand. I am not suggesting you
act rudely to an IRS agent or mislead anyone. I am saying
that it is very premature for you to be giving the IRS very
specific collection information before it has even been determined
that you owe any tax. That, in my mind, is like being measured
for the hangman’s noose, before you have even gone to
trial.
Of
course, I can tell you that after 27 years as a CPA I have
seen endless horror stories of people who thought they could
handle an audit without a professional to help. This generally
ends up about as well as representing yourself in court in
a criminal trial. Make no mistake, and audit is much like
a criminal trial, except you go through it with much fewer
rights than you would have in a courtroom.
So
what do you do when you get a visit from the IRS or receive
an audit notice? The best response after going through the
routine described above is to get yourself some competent
representation.
Nothing
will stop the IRS dead in their tracks faster than to inform
the auditor that you are represented by a licensed tax professional
and that the auditor should speak with them directly, and
them only. At that point the auditor knows they will not be
able to buffalo you into doing something stupid or saying
something incriminating.
With
a little bit of education, and the discipline to not be chatty,
your IRS audit will go as smooth as possible.
Need
help fighting the IRS?
Call our Trippon & Company CPA office at 713-661-1040.
We can represent IRS audit clients in all 50 States. Our phones
are answered 24 hours a day, 7 days a week. Call now and we’ll
start protecting your bottom line TODAY!
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