If the IRS selects your business to be audited, the best strategy is to cooperate-as quickly and efficiently as possible. Here are some other important steps to follow:
- Hire a stand-in. Tax experts say it's best if you don't try to represent yourself. You can authorize an attorney, CPA or enrolled agent to represent you at the examination. Keep in mind that whomever you designate will need power of attorney to represent you.
- Give yourself enough time to prepare. The IRS may try to pressure you into an early audit date, or an agent may even appear at your home or office and try to start the examination immediately. Don't let that happen. Tell them you need time to see your accountant and prepare. Set a date that gives you the time you need. That way, your accountant or attorney will have sufficient time to review your return and make sure you have the necessary receipts.
- Don't volunteer information. If you decide to go it alone, answer only the questions asked. Provide only records that directly relate to the items questioned in your IRS notice to avoid opening yourself up to other areas of investigation.
- Give them their space. If your business is selected for a field audit, be sure to give the IRS agent a work area that's set apart from employees. Select a "point person" in your business to deal with the auditor. This person should provide the necessary records, make copies and be a general contact for the auditor.