IRS auditor coming

[NECPA in NEBRASKA]

I know this is probably a stupid question, but is there any reason to meet with my client and an IRS auditor in the conference room where I don't have a computer or just go ahead and meet with them in my office? They are supposedly just coming to discuss depreciation and the agent said that it should only take about 15 minutes. I don't normally feel like I have to worry about anything, but this agent supposedly said at his meeting with my client "something about taking me before somebody" because he didn't think that I asked enough questions about a 100% vehicle usage. The client explained to him that it really was 100% and then he backed off. I did ask the client about it and he said that they have another vehicle that is used personally. I have gone through a two audits in the past few years and never has an agent threatened me personally. I am tending to blame my client, because he didn't want me to represent him and I don't have a clue what he said. They were apparently mad at him, because his wife hung up on them before the audit. (She is very ill, and probably didn't know what she was doing.) I don't know why they would have called him in the first place, unless he isn't telling me everything. I don't feel as if I did anything wrong, but I haven't dealt with this agent and am paranoid about this meeting. If anybody has any thoughts, please let me know.

Thanks!

[JohnH]

I'd opt for meeting with them in the conference room. Once you discuss things with the auditor, you can excuse yourself and go get anything he/she requests, if needed. If nobody told you what to bring to the meeting, then there's no reason to expect you to have it there.

Incidentally, if the auditor actually said (s)he didn't think you asked enough questions, how could (s)he have any opinion on the subject until (s)he asks you what you did ask?

[mcb39]

Chances are that if they are looking for something, they will give you time to find it. In my experience, my clients found things that the auditor was not looking for and came up with deductions that he had overlooked originally.

[jainen]

>>I am tending to blame my client<<

Although the auditor is apparently employing this technique effectively, blame is not really the issue. Find out what the true issue is and deal with that. Do not let the auditor anywhere near records other than those specifically identified as needed for the examination.

Obviously your preparation would be very different if the audit is about the preparer rather than the taxpayer. You must ask this question directly. Then, just as you would not recommend the client represent himself, you should not represent yourself.

[OldJack]

>>Do not let the auditor anywhere near records other than those specifically identified as needed for the examination.<<

I could not agree more with Jainen on this, however, I would spend advance time preparing detail information on what I thought might be the problem and have that document ready to present at the meeting if it would solve the problem. Separate documents for separate subjects. I expect to spend much more time preparing for an audit than I spent preparing the tax return in question (usually no cost to the client). By having a document/analysis/statement with the information prepared before the meeting you can give the auditor a copy and get the auditor out of your meeting in fast time. Only provide proof documents for what he asks for.

[NECPA in NEBRASKA]

Thanks everyone, for the fast replies. I've always gone to the IRS before and the audits were resolved in a couple of hours or less. I reserved the conference room. I don't know what he wants for sure. My client just mentioned depreciation. I haven't seen any of the paperwork, because I hadn't been involved with the audit. I haven't been asked to provide anything. I'll just take the depreciation schedules to the conference. Jainen, thanks for suggesting that I ask if I am being audited. I have always spent quite a bit of time preparing for an audit, but it's much harder this time, because I haven't been involved. I will just go through the return and look for red flags.

Bonnie

[Margaret CPA in OH]

I find it curious that you haven't seen any of the paperwork, at least as yet. Surely you can get copies from the client immediately, right? You probably have or will very soon have POA so can get copies from IRS, right? I should think it invaluable to be apprised of the issues beforehand. Good luck with whatever happens and let us know the outcome.

[NECPA in NEBRASKA]

Margaret, I haven't seen anything, because the client has been handling this all himself. He is a truck driver and he won't be home to send me anything until the night before the meeting. The agent called him on his cell phone. I can't even get a POA because he is gone and his wife is now living with a relative out of town because she is ill and can't stay home alone. I know that his schedule C is an issue and his gambling income and losses. The agent questioned why he reported more income than he received W2G's for. They are coming Thursday, so I will know more then.

Thanks!

Bonnie

[JohnH]

I hope he has a gambling diary or log.

[TAXBILLY]

You've got a big problem here in my view. How can you represent someone without the paperwork in front of you? Is the client going to be present? If not and you don't have a POA I would suggest calling the auditor and reschedule when you have concrete information in front of you.

taxbilly

[NECPA in NEBRASKA]

Taxbilly,

The client is coming to the meeting. The agent only mentioned discussing the depreciation to my client and said that it should only take about 15 minutes. I will have those schedules with me and if he asks for something else, I can get it.

Bonnie

[OldJack]

before sitting down I would insist that my client sign a POA if you can't get it before. Otherwise, I would leave.

[TAXBILLY]

I have a bad feeling about this. If you'll need to provide additional info after talking with the agent I would suggest you tell him to document whatever he wants in writing. When I was a rookie at this 35 years ago I let the agent push me around because the more you provide the more they want.

taxbilly

[michaelmars]

if its only "for 15 minutes" then why not try and do it on the phone, that way you don't need any doc ready or accessable. "why the client reported more income?" Maybe because he is honest!, that would be omy only answer on that issue. but if the agent is willing to reduce the income to only the amount on the w-2g's just say thank you!

[NECPA in NEBRASKA]

Do I really need a POA, if I am done with this audit when they leave the office? To be honest, I want as little to do with this as possible. I know that the client doesn't want to have to pay me to handle this or he would have hired me in the first place. He thinks that he can deal with the IRS, because he handled an audit back in the 80's. I suggested that he not represent himself. I didn't want to say no to the meeting, because I don't have anything to hide. Now I'm really not going to be able to sleep!

[ed_accountant]

You may want to contact the IRS auditor and ask him to fax his questions to you in advance so you can have the necessary paperwork. I am sure your meeting will be longer than 15 minutes.. Good luck

[Margaret CPA in OH]

In my experience, no IRS agent will talk to you or provide information about a specific client without the client present or a POA. Since your client will be present, you may not need it unless your client expects you to answer. I doubt you would get any documents without the POA. If is was me, I would insist on a POA now or as soon as possible. I agree with OldJack. How can you represent the client without it?

I am a bit puzzled, too, as to why you would agree to this with such a recalcitrant client. Why don't you meet with him the evening before or very early in the morning to look over the paperwork and talk straight with the client? You need to be prepared for the client's sake. If the problem is you as far as the agent is concerned, that's another matter completely. I think you don't want either you or your client to be put on the spot. Be prepared!

[NECPA in NEBRASKA]

OK, now I have some more information, because I called my client again. The auditor wanted to go to his house, but the client didn't agree. I don't know why, except they live in a pretty dumpy place. Then he wanted to come here to have me explain the depreciation. This is a new agent, he had been a small businessman, and said that they were the only people that would hire him because of his age. Now my client tells me that the guy asked a strange question. 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? Don't we all give our customers a bill? I report my income. Now I'm getting PO'd and my heart is pounding. If he is after me for some reason, don't they have to let me know? I haven't had any problems with the IRS before and I don't know why this guy is acting like I'm some kind of criminal. 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?

Thanks!

Bonnie

[jainen]

>>the client doesn't want to have to pay me<<

This is a dead deal. You simply can NOT do this because a) you don't have a clue what it is about, b ) the only issue seems to be what YOU have done, c) you don't have any record of what the client contact with the agent has already involved, d) the client does not trust you, e) the client has not authorized you, d) the spouse is not capable of ever authorizing you, e) the agent is inexperienced in his current job and in working in a large organization at all, f) the agent's request makes no sense whatsoever to any of the august minds on this board, and g/h) by definition you can't be a professional without getting paid and the agent has some screwy idea about that whole thing.

Fax the depreciation worksheets to your client with a bill for a $1500 retainer, and spend the extra free time listening to good music.

[TAXBILLY]

>>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 in NEBRASKA]

OK. I'll fax them over to the client and tell him to fax them to the agent. I'll let you know what happens.

[JohnH]

Your client isn't telling you the truth - at the least he's playing fast & loose with the facts for some reason. I don't believe half of what he claims the auditor said to him. Possibly the questions about how you were paid has little to do with you but are part of a larger interest in how the guy pays all his bills. Maybe he's being quizzed about some things he doesn't want to tell you or the auditor about and he's trying to stir something up in hopes the REAL problem will go away. (I'm thinking possibly there's more to the gambling issue than you know, and he's talking to you about the depreciation as a smoke screen, but this is pure speculation. Maybe because I've dealt with a few clients like this before, as have most of us).

[NECPA in NEBRASKA]

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

[michaelmars]

i agree with jainen and taxbilly. at the very most i would give a client the depreciation method and conventions used and not a thing more. Where as i don't think you need a poa if the client is there to give verbal permission for you to "advise" him i would get one anyway. This type of client will blame you for saying the wrong thing, no matter what you say if he gets a huge assessment and you want a poa so he cant say you offered info against his wishes.

there is no way i would allow this agent to question me in front of a client on issues that i am not prepared for and not as a follow up on an audit i didn't participate in.

i would probably ask the agent to issue a doc request if he wants any info that the clietn didnt have for him

[michaelmars]

i would not notify the insurance co yet, so far this is a non-issue, unless you have exposure because you know there is a problem with the return. Last time i notified insurance over a minor issue the ins co made me talk to their attornies, fill out forms and i lost 1/2 a day on an issue that never really existed.