What Is the Best Strategy to Take When Being Audited?

What Is the Best Strategy to Take When Being Audited? So the first thing that we say to our clients is that you have the advantage in an audit the advantage that you haven't an audit is number one you're the tax payer and number two you have access to all the documents so the government is put in a position where they're asking you for records you have the opportunity to control both the scope of the information that's being provided and to control what information you provide so you're controlling the scope and you get to edit out within that scope what actually gets provided so you have a lot of choice there what I tell our team is "you can't control bad cards" so for example if a tax return is unreported a hundred thousand dollars in income you're probably not going to be able to hide that but the advantage that you get an audit is you can control the order in which the cards are being put are being dealt so the very first thing that we do in an audit is we like to know why the taxpayer has been a lot of it we look at the return and then we go through a pre lot, so we put the off the tax return through the same level of scrutiny we're actually more scrutiny than what the IRS is going to put it through so we're looking for issues that could come up we're determining whether things are a big deal a little deal or not a deal at all and so we're actively looking at those issues and we're pre-screening things once we pre-screen things then we develop an audit strategy and this has nothing to do with the IRS this has to do with how are we going to present.

The audit to the auditor when the time comes so for example in a case of somebody fun reporting a hundred thousand dollars an income the first question is in the order they're going to find it the auditor is going to find it then there's no reason to try and hide the ball of it so it's to the advantage of the client in that situation to just come out and admit that there's been $100,000 underreporting the reason for that is by coming out in the beginning and saying that you're going to avoid all the penalties you're going to avoid all the presumptions that the auditor has that has been done fraudulent and you're gonna get yourself out of much more than you would by trying to hide the ball on a hundred grand if there are things that you can hide the ball from the auditor on then you're going to present things strategically so for example if you're missing receipts then if you're missing some receipts then you'll provide a general sample or if one tax year looks better than the other you'll present the 18 data versus. The 17 data or vice-versa so the audits are a fluid strategy but by pre auditing a tax return by organizing the material appropriately and then controlling the presentation you're going to have a much higher success rate than an audit maybe just show up with a whole bunch of documents just to hand things over to the auditor the most important thing that you can do from an audit in an audit from a strategic perspective is to control the flow of information control the pace of the audit and to move the auditor through the playing field as you think they should move not to have them dictate how the audit goes .


Sam Brotman, JD, LLM, MBA

Owner and Director of Legal
Brotman Law