The Audit Process: Sending Only Important & Requested Information Communicated to Your IRS Agent

Frequently during the process of an audit taxpayers are desirous of telling their IRS auditors everything. Though a taxpayer will want to tell the IRS the whole truth and nothing but the truth, often times a taxpayer will share information that is not germane to the completion of the audit and the closing of the audit file. To this end if at all possible I do not take any of my tax clients along with me to the meetings with the IRS meetings as well as I am sure to only include information that is necessary, required and appropriate to assist the tax auditor in the process. Enclosed is a sample letter one might use:

-Everywhere where you say each business name either list the company name in full or develop and define initials such as:

-A Sample Company, LLC (hereinafter called ASC, LLC)

-Another Big Sample Company, Inc. (hereinafter called, ABSC, Inc.)

-When you describe the "deal" between the companies detail it as a financial arrangement/business negotiation and then list the names of both companies.

-Leave out any references to ABSC, Inc. financial results as they are not the company being audited.

-Several times you make reference to both you personally and the LLC. All of these should be deleted and refer to ASC, LLC only, as only the LLC is being audited.

-In the repayment process I would eliminate the word sporadically.

-I would take out all references to his past signors on personal accounts as this is a business audit.

-I suggest you have Medical Insurance Premiums deducted from the business bank account in future.

-Delineate that/if capital credit card bill is used for business and what types of business expenses.

-I would take off the reference to how data processed with your prior accountant.

-There is no need to cover personal monies loaned back and forth personally as this is a business audit.

-There is a need to document any personal loans made to a ASC, LLC and to document by promissory note any outstanding balances at each years-end by a signed agreement between all of the parties detailing the interest rate, payment terms and conditions.

To learn more about tax entities and the taxation thereof visit http://www.hiscpa.com/article2.html There you will also discover a wide host of resources for American Entrepreneurs.

John Dillard is an Christian Speaker/Author and Certified Public Accountant in Duluth, GA. To See how he takes Christ along with him to work visit http://www.hiscpa.com/  and for his latest book Overcoming Life's 9/11's: Job's Journey and a Voice of One: Nehemiah's Prayer visit http://www.john-dillard.com/  or call John Dillard CPA today at 770.814.9304 (All Rights Reserved) Dare to Attempt Something so Great for the Kingdom of God that it is doomed to failure, lest Christ be in it!