48.5 Handling the Audit

If you have authorized someone to represent you at the examination, your representative may appear at the examination without you. If the IRS wants to question you, it must issue you an administrative summons. If you are present and questioned, you may stop the examination to consult with counsel, unless the examination is pursuant to an administrative summons.

Audits conducted at an IRS office may conclude quickly because they usually involve only a few specific issues. In some cases, the audit may take less than an hour. The key to handling the audit is advance preparation. When you arrive at the IRS office, be prepared to produce your records quickly. Records should be organized by topic so that you do not waste time leafing through pages for a receipt or other document.

If the agent decides to question an item not mentioned in the notice of audit, refuse politely but firmly to answer the questions. Tell the agent that you must first review your records. If the agent insists on pursuing the matter, another meeting will have to be scheduled. The agent might decide it is not worth the time and drop the issue.

Common sense rules of courtesy should be your guide in your contacts with the agent. Avoid personality clashes; they can only interfere with a speedy and fair resolution of the examination. However, be firm in your approach and, if the agent appears to be unreasonable in his or her approach, make it clear that—if necessary—you will go all the way to court to win your point. A vacillating approach may weaken your position in reaching a settlement.

If the IRS has scheduled a field audit, ask that the examination be held at your representative’s office. If you have not retained professional help and the examination takes place on your business premises, do not allow the agent free run of the area: Provide the agent with a comfortable work area for examining your records. If possible, the workplace should be isolated so that the agent can concentrate on the examination without being distracted by office operations that might spark questions. Tell your employees not to answer questions about your business or engage in small talk with the agent. As with an office audit, help speed along the field examination by having prepared your records so that requested information can be quickly produced.

Recording the examination.

You have the right to make an audio recording of any interview with an IRS official. Video recordings are not permitted. No later than 10 calendar days before the interview, give written notice to the agent conducting the interview that you will make a recording. Later requests are at the discretion of the IRS. You must pay for all recording expenses and supply the equipment. The IRS may also make a recording of the interview, upon giving notice of at least 10 calendar days. However, IRS notice is not necessary if you have already submitted a request to make a recording. You have the right to obtain a transcript, at your own expense, of any recording made by the IRS. Generally, a request for a copy must be received by the IRS agent within 30 calendar days after the recording, although later requests may be honored.