- The Washington Times - Monday, March 25, 2002

When the notice arrives from the Internal Revenue Service telling you that your business return is about to be audited, of course you're going to panic.
But try to remember three things that should help you feel a little better.
First, accountants and tax lawyers say they've found the IRS, even during audits, to be much more human and easier to deal with than in the past. Second, what the IRS is looking for is a good-faith attempt to comply with tax laws. If you can show you've done that, the audit is unlikely to be the horrific ordeal you're expecting. Third, and most important, you don't have to handle an audit yourself.
It also might help to know what an audit is all about and how you can make the process easier.
Unless one of your employees is an accountant experienced in IRS audits, the best thing you can do is to turn the matter over to a certified public accountant or other tax professional. Yes, that can be expensive, but trying to do it yourself will cost your firm dearly in terms of lost business opportunities and customer relations because you'll be distracted by the audit.
Trying to meet with the IRS on your own could also land you in trouble if you slip and say the wrong thing.
Mickey Ison, managing partner of Bean & Ison, an accounting firm in Memphis, Tenn., recalls the case of a client who decided to meet with the IRS agent herself. She and her husband had a small farming operation as a sideline, and as she chatted away with the agent, she cheerfully said, "When my husband gets on that tractor, he just loves it. It's kind of a hobby for him."
That was all the agent needed to hear to decide that the farm was no business, and disallow all the couple's business deductions. When she turned to Mr. Ison for help, he was unable to undo the damage.
"Just saying a word can get you into trouble," Mr. Ison says.
Soon after you tell your accountant or lawyer that you're being audited, you'll need to sign a power of attorney that allows your representative to discuss your case with the IRS.
After you've done that, "get out of the way and let the representative do his job," says Dale Fashinpaur, a partner with the accounting firm CBIZ Business Solutions in Akron, Ohio.
Mr. Ison says the next step for the CPA or lawyer is to call the IRS agent assigned to the case to find out what records and documentation are to be examined during the audit.
"I'll probably go to the client's office to gather up the information that the agent wants, bring it to my office … and make it as organized as possible," he says.
You might find you never have to meet the IRS agent. Mr. Ison says his clients' audits are usually done in his firm's conference room; the agent arrives, starts looking over the client's records and documentation and asks the CPA about any item that needs clarification.


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