- Always make sure you have protection. Contact the tax attorney, a CPA or an enrolled agent to help you and represent you during an audit.
- Make sure you ask the person you have chosen to work with if they have ever worked on an audit for your particular needs. If they say yes, ask them if they won; if they say yes to that, ask to speak with that former client to get a good reference for that professional.
- Always make sure that you have good books and records. I highly recommend you keep all of your receipts at least seven years. I also recommend you hire a professional bookkeeper to handle the preparation of your books and records. Even a small business can get into trouble and lose an audit if they don't have the proper documentation.
The key takeaway is that a qualified audit representation team should be not only knowledgeable on taxes, but also skilled in building out the information and preparing a persuasive presentation of the facts and law, as well as seeing the matter through the administrative process and, if necessary, the courts. We find that in many cases prior tax professionals:
- Failed to be educated and understand the examination process as it relates to planning, execution and resolution of the audit, resulting in an unpleasant, disjointed, stress-filled and distrustful interaction with the audit team.
- Failed to be pro-active and engage the audit team, which proved to be against the best interest of the taxpayer and would have produced a less than desirable result had they not reached out to different representation.