Whether dealing with the IRS, the FTB or the State Board of Equalization, Dealers and their professionals need to adhere to tax etiquette. That etiquette includes:
1. Timely responses – respond quickly to an auditor’s request for information. Document the response and turn-around time. Always respond in writing!
2. Be prepared – failing to prepare for an audit generally sets a bad tone with the auditor. If given a request for information, be reasonable and respond promptly. Give the auditor what they want (i.e. only what they “ask for” and nothing more!) and get them out of your hair.
3. Honesty – the old adage that honesty is the best policy applies equally to an audit. Be straightforward! An auditor will forgive a mistake, but will not forgive deception!
4. Confrontation – if unable to resolve a matter with the auditor, go over his head. However, first inform the auditor that you intend to go above their head. You do not want to make an enemy by ticking-off the person in the field! Also, if you intend to go-up the ladder, do so gradually and do not attempt to go immediately to the top!
5. Neatness counts – a meticulously prepared return with accompanying support and documentation is likely to avoid an audit! Often times, revenue agents look for the easy-pick that they consider a sloppy return likely to have errors on its face. Take the time to prepare a complete return and possibly avoid the audit.
6. Finally – make sure the auditor understands your position. Often times, disputes can be resolved by assuring both sides understand the issues and are talking about the same thing.