IRS auditor coming

[Jack from Ohio]

Great, now my client is mad, because he won't be back for another month during the week after this meeting. I can't fax it to him, because he is not home to turn on his machine. I'll just call my insurance company and see what they say.

Bonnie

Mail your client the depreciation information and Publication 17. Do NOT get in front of an auditor with or for him. If the situation is not grave enough for the client to make time for the IRS, then he must certainly be earning enough money for the assessment.

Then FIRE HIM!!!!

You have clients that respect your knowledge and professionalism. He does NOT. He obviously is not telling you all.

Give your client all the information and do NOT take any more phone calls from him. If the IRS has a problem with you and your work, you will hear from then directly. Nothing a client tells me that an IRS agent says has any value. Only what is on paper has any weight.

FIRE HIM!!!

[michaelmars]

i don't think you can fire him. if you are infact a target for something then you want to keep you line of communication open with the client. right now he is just too cheap and arragant to have you do the audit since "=he can do it himself" but if you fire him he becomes an angry disgrunted adversary.

[OldJack]

>>He asked him how he paid me? My client said that I gave him a bill and he paid me. Then he said that the guy said "very interesting". WTH is different about that? <<

I would guess the agent was questioning if you were really the paid preparer as he thinks the taxpayer has done the tax return or made changes after you prepared. Very interesting means there is something the agent thinks should be different on the tax return such as unreported income or deduction for a vehicle that is not justified. Most of the other things you mention is just remarks by a dumb inexperienced agent. They are the most dangerous but his supervisor will usually have more common sense. I have found that these inexperienced agents can be bluffed if you keep calm and let them make mistakes. You really must know what the agent wants before sitting down, call him and ask for a copy of what was sent to the client or get a copy of the notice from the client. Of course you are concerned but you should not show it.

[michaelmars]

"he thinks the taxpayer has done the tax return or made changes after you prepared"

interesting thought-and a good one. if you do meet with the agent make sure you see the return he is auditing before you say a word. and see if it matches your files and if it has your signature.

[jainen]

>>interesting thought-and a good one. if you do meet with the agent make sure you see the return he is auditing<<

Oh, yeah, lots of great thoughts here. But how is Bonnie supposed to see that return? How come nobody else here seems to notice her deal-killer, "I can't even get a POA because he is gone and his wife is now living with a relative out of town."

Well, Bonnie, I notice. And even though he is inexperienced, I'll bet the agent notices too. So don't worry about the fax. You can send it later. Nobody is going to do anything with it anyway. This is a dead deal.

[TAXBILLY]

Your client is running away from the problem and is attempting to leave you holding the bag.

No POA, no help. Period.

taxbilly

[NECPA in NEBRASKA]

I faxed the POA to the where his wife is. It should be faxed back tonight or tomorrow morning. The husband will come in and sign it when he gets into town. The IRS agent was out today and they are closed tomorrow. I did call my insurance company and they basically said that the IRS may be going on a fishing expedition and should have known that I needed a POA and that they should have summoned me. I don't know how much I want to push this guy or anger my client. I don't feel that I did anything wrong. The insurance agent said that the IRS has been saying at the forums that we all have to see records and mileaqe logs instead of accepting what the clients give us in writing. If that's the case, maybe it's time for me to work at Wal-Mart. This will mean that I have to meet with every client and not take information over the phone, by fax or E-mail. I don't want the client to feel like I am trying to hang him, and I told him that I am just trying to protect both of us. He hadn't told the auditor that his wife isn't here, because he didn't ask. I'll let them use the conference room and give tghe agent the depreciation schedules. The client does not want to reschedule the meeting because he doesn't want the auditor to get mad and he just wants it over. I told him that I am going back to my office and he can deal with the agent. It's really sad, because my client is really a nice guy that I've known since I was an intern in college. (A long time ago.) I really wish that he had hired me to represent him, because I didn't feel this vulnerable on the other two audits I've been through in the past few years.

Thanks for listening.

Bonnie

[TAXBILLY]

Bonnie,

Stop beating yourself up or worrying about this. You know you did not do anything wrong so don't let this client loser or the IRS agent make you believe otherwise. Proceed in a professional manner and you'll be O.K.

taxbilly

[NECPA in NEBRASKA]

Thanks! I hope that everything works out.

[OldJack]

>>maybe it's time for me to work at Wal-Mart<<

Nonsense!! You are a CPA and the rookie agent does not know anything that you don't. In fact he probably knows a lot less. On a vehicle mileage tell him to show you where mileage records are required when the vehicle is not used for personal purposes other than de minimis use. In other words, throw the ball back in his court when he asks questions.

[ILLMAS]

Something I don't understand about your client is why he decided to represent himself in the first place, did he ever call you and told you he was going to be audited or did you just find out recently? Another thing I find hard to believe is the auditor asking how you get paid, makes me wonder if your client had the return modified to qualify for a mortgage or some type of loan that he needed to show more income and the modified return is labeled as "Self-Prepared". Just a thought, client presented the modified return in your CPA folder or in the package you give your client and sees "Self-Prepared", then I would question the paid preparer bill. For your meeting just give the auditor the depreciation schedule and let him and your client talk, allow them to use your conference, incase auditor starts asking more questions, be honest and let him know there is no engagement between you and your client to represent him, thats all. Let your client dig himself out of the hole in got himself into.

[NECPA in NEBRASKA]

That's what I plan to do. I'll give him the schedules and tell him that I am have not been retained to represent the client. I really don't know why the client didn't want me to represent him. He did call me before he went to the meeting and I told him that I could represent him, and that I had done so for a couple of other clients the past few years. I couldn't force him to let me go. I haven't actually seen him in probably 20 years. He was always on the road and his wife would bring me the information before she got sick or he would mail or fax it. I even told him on the phone today that I could take it over from here if after they sign the POA and he still wanted to finish it. He thinks that the IRS agent is just some nice straight forward guy and that they have some kind of rapport. Maybe he is. The two audits that I have had in the last few years, the auditor has been really nice and the audits weren't stressful at all. I don't know if I am getting the whole story, because I just don't know how this all started with a phone call to the taxpayer and turned in to an audit when his wife hung up on them. At least thats what the auditor told my client. If the wife hung up on them, she wouldn't even remember or probably know what she was doing. I don't know why the first contact would be a phone call. The client represented himself in an audit back in the 80's and didn't think that this would be any different. I just want it to be over, because it's making me physically sick. I feel a little better, because I just finished playing Wii boxing and tennis. I really appreciate all of the ideas on this website. I don't know what I would do without all of you, because in a one person shop there just isn't anyone to bounce things off of and most of the tenants in my building are psychiatrists and counselors. I try not to talk too much, because they will all want me and my crazy family for clients.

[jainen]

>>tell him to show you where mileage records are required<<

Ummm, I wouldn't push too hard on that particular point, friends. As a matter of law, travel & transportation records ARE required, as are a few other items. But generally you can rely on the client's unverified statements unless they are incomplete or inconsistent. At least that's what Circular 230 says.

[OldJack]

>>tell him to show you where mileage records are required<<

Ummm, I wouldn't push too hard on that particular point, friends. As a matter of law, travel & transportation records ARE required, as are a few other items. But generally you can rely on the client's unverified statements unless they are incomplete or inconsistent. At least that's what Circular 230 says.

Thanks you Jainen! You have made my point!! Only you, a very experienced tax person challenged my statement. The point here is that you want the IRS agent challenged and he is going to be not sure if it is a requirement in this case. All the quick resources the Agent has talks about recording business verses personal use. Nothing is said about recording all business use and in fact most business that do not allow personal use do not bother recording mileage use. You can use a gray area like this to argue and get an agent to think twice and be more reasonable.

[GeneInAlabama]

>>I don't know why the first contact would be a phone call<<

I don't know about now, but it used to be that initial contact was ALWAYS by mail. Years ago when I was a tax auditor, a woman came into my office with a big cardboard box full of records and said she was ready for the audit. I asked her her name and then told her I didn't have any record of her being scheduled for an audit. She said "you called me on the phone and told me to be here with all my records today." When I told her that we never notify anyone of an audit on the phone, that it is always by mail, she said under her breath "that dirty . . ."

I wonder if this could be a prank on either you or the tax payer. It seems odd that an auditor would just come out and tell someone that he was inexperienced.

Just a tought.

[DougO]

>>If I call off this meeting and don't explain the depreciation to this guy, won't I look like I have something to hide?<<

You are acting guilty (about what?) for no reason. My strong recommendation is to call the auditor and cancel this meeting. You can't walk in there and not know what's going on. Evidently your client is acting in an evasive matter.

taxbilly

NECPA - do not attend this meeting without getting a POA and meeting with your client beforehand. If he is not willing to do this then the client needs to leave you completely out of the process - and you need to stay out of it. You can provide the client copies of what you can but that is it. Before you ever sit down with the IRS you need to know what the client has told them and what issues are being questioned. The agent should, once you have the POA, meet with you and be willing to discuss all the issues discussed and then give you a document request to answer their questions.

And this looks like a client that needs to "leave" !!

[NECPA in NEBRASKA]

No, it is definitely for real. The taxpayer already met the agent at his office a few weeks ago. I'm not really surprised, because the agent that I had dealt with on two audits within the past three years told me that she had moved back here from working in a bank to be closer to her family. This is an appointment for the taxpayer to clarify some checks that the agent didn't know what to do with and bring him some bank records that weren't included at his original meeting. I told him that when I have gone in the past, that I just faxed or mailed the missing records. I do think that my client has not done himself any favors. When he asked the agent why he was selected for audit, the agent said that it was because "someone hung up on us when we called". I don't know if that was really the reason.

Jainen, I am not going to push him on the mileage records unless he really pushes hard. Apparently he didn't ask the client for one. The CNA rep is the one that said that in the IRS forums that they have been to this year, that the IRS is saying that they are expecting preparers to see the logs and recordkeeping. I asked the rep if they were going to fight for us and she didn't know the answer. She told me that if the IRS finds that I made a mistake, that they might audit all of my clients. That made for a sleepless night. I was really sorry that I had called CNA, since I don't even think that I made a mistake.

After this is over, I am going to find some more CPE on handling audits. I've only had six in thirty years and never got this stressed out before. Thanks everyone.

[GeneInAlabama]

>>She told me that if the IRS finds that I made a mistake, that they might audit all of my clients.<<

They will NOT audit all your returns if you made a mistake. They will audit all your returns only if you made serious false claims on a LOT of your returns. Don't let these people intimidate you.

[NECPA in NEBRASKA]

John, I just saw your reply and I am thinking that you may be right. Yesterday was the first time that the client mentioned anything to me about the agent asking anything about how he pays me. I don't know what is going on, but I am just going to act professional and give him the depreciation schedules. The client has until the meeting to decide if he wants me to represent him. I don't think that he is going to go for it, because I told him last night that he could bring me the information and I would take the meeting, but he still insists on coming. He thinks that the IRS will think that he has something to hide if he doesn't show up. I asked him if the agent had mailed him the list of what he wanted additionally and he said that he told him not to, because he wouldn't be home to get the letter. I'm assuming that the agent mailed it anyway, but he hasn't been home to get the mail.

Thanks!

Bonnie