Five ways to help clients going through an audit
It’s a situation that would strike fear into any client or tax professional. Still, audits may happen, and it’s important for you to make sure your clients are taken care of if they ever have to face this circumstance. Your assistance will go a long way toward assisting your clients in dealing with the audit by supplying the necessary accounting and tax information and reducing issues, late tax payments, or fines.
Here’s what you need to know if your client ever goes through an audit.
1. Volunteer to be a representative.
Tax rules can be complicated at times, and it is critical that your client has adequate counsel from a tax specialist. You may feel more at ease representing your client if you are a CPA or an enrolled agent.
2. Assist in the organization of their tax records
A successful audit is dependent on having correct and validated records. Work with your customer to ensure that their records are in good order so that they can be submitted to the IRS in a clear and transparent manner. Encourage your customers to keep solid records throughout the year so that they can easily retrieve the proper information if the IRS need it. Also, emphasize the necessity of just giving the IRS with the records and information that they require.
3. Have everything in writing
Encourage your customers to capture their contacts with auditors in writing, particularly demands for papers or narrative explanations. This procedure may take care of itself for official requests and document exchanges, but be sure to urge your customers' point person to take contemporaneous notes to record all formal and informal contacts with an auditor. As the audits advance, anything other than today's weather or baseball score may be essential to your clients.
4. Take the time to plan ahead of time.
There may still be time to take advantage of the audit's timing to assist your client's preparatory efforts. Encourage clients to plan ahead of time to properly prepare paperwork and support for the positions they have taken. If that isn't enough, most auditors will accept reasonable and timely requests for extensions of this deadline, unless there are exceptional circumstances. Even during an audit, legitimate requests for time extensions are frequently granted to allow an audited firm to better meet an auditor's request. There may be a cost in the form of time restriction waivers, but doing it right the first time may be preferable to rushing it.
5. Ensure their safety.
The IRS is attempting to collect the tax that they feel is owing to them. If your client committed an honest error, the IRS will most likely just want the tax owed, plus any interest that has accrued. When the audit results are revealed, your client can pay the back taxes owing as long as everything is fair. Remember that your client can appeal the audit results through the IRS, and that there are escalation procedures in place if they disagree with the audit conclusions.
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