What Actions Are Negotiable in a Field Audit?

Tax Professionals' Resource
April 12, 2013 — 1,434 views  
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The Internal Revenue Service (IRS) conducts reviews and audits of your accounts and tax details to ensure that you are complying with the tax laws of the state. Field audits which are face-to-face personal meetings are usually conducted with businesses and individuals. The IRS will notify you about the field audit by mail and will then do a follow-up via a telephone call. The field audit can sometimes turn out to be a long and cumbersome process. While facing an audit, you can negotiate many factors in order to make things more favorable for you. The following are the 3 things that you can negotiate in a field audit.

The Location and Date of the Audit

You can actually negotiate with the auditor about the date and location of the audit. The letter from the IRS office will ask you to schedule the meeting as per your convenience. You can then pick a date between 60 to 90 days of receiving the initial letter from the office of the IRS. You can request to schedule your meeting at your home, your business place, or even at the office of a representative. It is always advisable to schedule the meeting at any place outside your family or business setting. A neutral environment will help you face the audit in a better manner. One such possible venue for the meeting is a conference room which can be made available at a local court house. You can also request the auditor to have a record of the interview. The request should be sent 10 days prior to the date of the interview.

Interviewing the Taxpayer

Officers performing the field audits will be required to do a thorough examination of your tax details. To face this, you will need a thorough and proper preparation. You can either be present at the interview in person or else you can also negotiate and send a representative in your place. The representative, however, must have a proper written authorization on the Form 2498. The auditor will tour your business, review your files, and put forward the proposed changes. You can either accept these changes or you can negotiate with the auditor regarding the changes made. If the final changes are not acceptable to you, you can then make an appeal to a higher IRS authority to look into your matter.

Negotiate for More Time

If the IRS is conducting a field audit of your business establishment, then you should be prepared for giving the auditor a tour of your entire business setup. The tour may last for a day or a week depending on the size of your establishment. The auditor may also question your employees regarding the operational activities of the company. If your employees do not have answers to the questions of the auditor, then you can ask them to negotiate with the auditor to give them more time to find out the required information.

Know the Reason

You can ask the IRS office the actual reason behind conducting the audit. This can be considered as one of your fundamental rights. Knowing the answer to why the audit is being conducted will help you prepare for the field audits and will also assist you in negotiating the terms in a better way.

Tax Professionals' Resource