Business Audit Preparation Tips & Tricks

In the event the IRS wants to conduct an audit at your place of business it is very important that you know all the steps to take beforehand to prepare and understand how a field audit works. One key aspect of a field audit is having a contact person that will communicate with the IRS when they come to your place of business. Below is a list of steps that should be taken prior to having the IRS come to your place of business.

Business Audit Contact Person

Your legal representation should make it clear to the IRS agent that all questions, requests for additional documents and any other inquiry must be given to a designated contact person. This designation contact person will then forward any inquiry to your legal representation for further analysis and review.

Keep Your Staff Quiet

It is important that you keep your staff quiet and explain to them that they are not to communicate any type of information to the IRS agent. Your staff should not give any kind of tour to the IRS agent and they should refer any request for any type of information to your designated contact person. Your contact person needs to be completely responsible for all types of information requests and inquires.

No Sucking Up

Do not under any circumstance give the IRS agent meals, free products or services, discounts and any other type of arrangement that could be considered a bribe. You always want to be courteous to the IRS agent but you never want to do anything that would make it seem like you were trying to win over the IRS in a non-ethical manner.

Keep the IRS Agent in a Separate Location

It is very important that you keep the IRS agent away from the public part of your business. They should be provided a private office that has been cleared of all business documents and away from employees. Make sure to keep the door closed to the office at all times to make sure the IRS agent does not over hear any type of business discussion that is happen elsewhere in the office.

Next you want to have your legal representation meet with your designated contact person to go over the details in the case. The steps below outline the things that need to take place between your legal representation and your contact person.

Designate an Office

The contact person should be advised to discuss all matters with the IRS agent in a separate office that has been set aside for discussions with the IRS agent. You don’t want the IRS agent to find any kind of documents lying around that could come back and hurt you later. Make sure the designated office for the meeting is clean and free of all business documents.

Keep Quiet at All Times

Explain to your designated contact person that they should only provide the documents requested and they should not answer any other questions or volunteer any other type of information. Have them understand that it is not their responsibility to answer questions to the IRS agent under any circumstances.

Ask For a Time Out

Have your contact person ask for a time out to talk with your legal representation if additional information, documents or any other type of inquiry arises when they are having their meeting. It is very important that they do not take it into their own hands to answer new questions on the spot. It is best practice to ask for a time out and review the new questions with your legal representation.

Fair Treatment

The IRS agent is a human being too and needs to be treated with respect. Make sure that your staff understands that this is just another person that needs to be treated fairly and without any type of disrespect. The smoother we can have an audit go, the better.

Remember the job of your contact person is to just act as a go between for your legal representation. Your contact person should not act as a second legal representative; they should simply do as they are told and nothing more. The better they are at doing as they are told, the better your audit will be conducted.

About Paul Gaulkin CPA

Paul Gaulkin is a Certified Public Accountant and enrolled with the U.S. Treasury to practice before the IRS. Mr. Gaulkin possesses unique technical knowledge in the process of securing relief for taxpayers nationwide with IRS and State tax problems. With an accounting degree from Florida International University, he is able to transform complex tax and accounting problems into easy to understand solutions.

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