Question

Your client has received a notice from the IRS. Your client is a high-income taxpayer, active in rental real estate, and is also a partner in several business partnerships. Provide a brief (one page or less) overview of what your client should expect from the audit process, including important milestones, deadlines, and tips. You may also discuss IRS practices and procedures, audit methods, and anything else you believe to be noteworthy. Assume your client has contacted you and asked you, “I received this notice of field audit. What should I expect?”

Answer 1

Client expectations:

1.Assign auditor to conduct audit.The process consists of pre audit meeting to determine the audit scope and method, and answer all audit process questions.

2.At your direction we can meet authorized representative. However, we need to completed a power of attorney and declaration by representative on file before we can discuss about audit case with third party.

3.Prior to finalizing the audit, we will schedule post audit meeting to review findings. We recommend same individual for pre and post audit meetings.

4. Throughout the audit, your auditor will conduct audit within a reasonable time frame with minimal disruption of business.

Audit methods:

During the interview your audit will discuss following audit methods

1.Detail audits: Review all documents for the entire audit period. Usually this method is useful for small businesses not for large business having large volume of records.

2.Sample Audits: Review a representative period of records within the audit period. The auditor discusses various sampling methods with you and determines a representative sample period. Sampling options include looking at all records preferably electronic records for a specified period or using software application to import selected records of review. It reduces audit time.

3. Estimated audits: When records are inadequate ,incomplete or not provided as requested by auditor then estimated audits based on information available