Our client came to us this past December with an IRS Audit looming over his shoulders. He received notification from the IRS (generally called an IDR, or Information Document Request) that the IRS was conducting an audit for his 2014 tax return. More specifically, the IRS Audit wanted to take a peek at car and truck expenses, income reported on the Schedule C, as well as Utility Expenses. When are clients call us with this type of IRS situation on their hands, we generally press for more information before getting involved with the IRS Audit itself.
The first step we take to handle an IRS Audit is to request a copy of any documentation the taxpayer has received from the IRS. Further, we request a copy of the IRS tax return for the year the IRS is auditing. This allows us to see a few things; when is the appointment, what is the IRS asking for, what types of expenses (or income) is the IRS auditing and asking questions about. Once we receive this information, we immediately get the taxpayer back on the phone to schedule an in person meeting.
Once we are able to sit down with the taxpayer we examine his / her options in relation to the audit, in general what types of documents we need to be successful with the IRS Audit, as well as what the taxpayer can expect in terms of timelines, what are goals, are, and our costs. With this particular client, he actually constructed the return on his own, and unfortunately did the return incorrectly. We knew we needed to have the taxpayer make some changes, come up with information for us, as well as do so timely as we had a pressing appointment scheduled for February 1st. (the client hired us shortly before the New Year’s Eve holiday).
After working with the client to amend his tax return (we hire this portion of the work out with one of our trusted CPA or EA partners), we examined the documents he sent relative to his expenses, corrected a few things, and worked with the CPA to insure our numbers matched the amended return. In the interim we were making sure all documents and the return were received timely in our office for processing prior to the audit.
Once all the items were received, we organized a file as well as a cover letter, and several other documents to present to the IRS Auditor. All in all the audit concluded within 1 hour (2 hours total with drive time). The appointments are generally set for a 4 to 8 hour time frame. The auditor was happy with our work, our presentation, decided to agree with the minor changes we made to the tax return, didn’t bring up any additional issues, and the client will walk with refund. (We processed the 2015 return and tax refund with the auditor which allowed for the refund to be credited toward the small balance on the 2014).
We immediately informed the client the IRS Audit was completed, and we are now awaiting paperwork from the IRS to confirm the determination. The taxpayer could have not been more pleased with our work.
If you or someone you know is facing an IRS Audit by the IRS please call us immediately at 720-398-6088. We will be pleased to help keep your IRS Audit exposure to a minimum!!!