Tax Audit Representative and Your Records
How does your tax audit representative avoid having you appear at the audit when someone on your behalf must explain your case to the IRS? After all, the IRS audit guidelines are very clear about this: someone–you or someone acting for you–must explain the books and records you turn over. So how do we keep you, the client, out of the line of fire? The quick answer: by educating your tax audit lawyer, he can talk for you. The IRS audit rules state that your accounting and record keeping system should be explained to the IRS auditor by the person most knowledgeable of your system. The IRS audit guidelines go on to say that the appropriate person may by the taxpayer, an employee of the taxpayer (the person who keeps your books), or the taxpayer’s representative. As your tax audit representative we “go to school” on your accounting system and “go to school” on how you do business, so we know as much or more about your financial affairs that even you do. Then we can legitimately appear on your behalf at the IRS tax audit and explain your financial affairs.
What will we be expected to explain on your behalf? Our explanation will include:
1.
1. How your income (sales, 1099, W-2) and your expenditures are reported in your books and how they reconcile to your tax return.
2. We will show the IRS auditor how income, expense, and balance sheet items can be tracked through the accounting system (an accounting system includes all books of entry and all reconciliations).
3. If you have Cost of Good Sold, we will demonstrate how to trace the flow of purchases and inventory through to Cost of Goods Sold.
Once we know your system we can speak on your behalf and so we educate ourselves about your case from front to back, top to bottom. You should expect no less from the tax audit lawyer you hire to defend your tax audit.