If you chose to represent yourself in an IRS Examination realize the IRS Revenue Agent (RA) or Tax Compliance Officer (TCO) assigned your file is trained very thoroughly to advocate on behalf of the US Government. One method used quite often is to create a (false) sense of security in the personal interview setting or even on the phone with cathartic yet repetitive narratives. This is done in my humble opinion to lull you into a sense of complacency which subsequently if not held in check leads to providing responses way beyond the scope of the audit matters in question. More importantly when you talk too much you are creating opportunity for the RA or TCO to potentially broaden the authority of the audit should you happen to say something inadvertently that could appear circumspect.
When it comes to the actual audit process:
1. Recognize the IRS RA or TCO assigned your file is a person too who is just trying to do their job of advocating as aggressively as allowed by law on behalf of the US government and resist the urge to posture aggressively in response as it accomplishes very little to nothing and is generally futile. Most RAs and TCOs are reasonable and I’ll even go out on a limb saying that there even a few that are outstanding which can be a sincere blessing. If however you get an IRS RA or TCO that is a unilateral jackass – they do exist – this is where you need to focus on internalizing emotions and recognize you can request a different examiner.
1. Be prepared. Usually the IRS will issue you an Information Document Request (IDR) in advance of the audit, be sure to have all documents in order as requested in the IDR.
2. If the IRS insist on conducting an in person meeting at your place of business try first to get the venue changed to ANY PLACE THAT IS NOT YOUR PLACE OF BUSINESS OR YOUR PRIMARY RESIDENCE. For more information on why this is important contact me directly.
3. Be professional, cordial and polite but offer no small talk.
4. Remind the IRS RA or TCO that the same goal of efficiently closing the file at hand is shared by both sides AND THE BEST WAY TO DO THAT IS TO STICK WITH THE ISSUES AT HAND.
5. Respond promptly to any follow up requests made but first insist that the request be made in writing.
The most important take away from this post is that if you are not going to hire an Enrolled Agent to provide representation service, at the very least:
1. Recognize that the IRS RA/TCO (Examiner) IS NOT YOUR FRIEND – no matter how ‘connected’ to the individual examiner(s) involved you may grow to ‘feel’ over time2. Remember to answer only questions asked. One of my many mentors used to tell me over and over again, if they ask you if you know the time, don’t tell them how to build a watch.
For more information check out what happens in a compliance check as well as what happens in an audit.