When some taxpayers receive notices of audit deficiency, they hire consultants to challenge audit findings. In some instances the use of third party consultants is advantageous because there is a legitimate error in fact, audit methodology, or application of the law. However, there are other instances in which the taxpayer really has no basis on which to mount a challenge. It is the unique responsibility of the taxpayer to define their goals upon receipt of audit findings.
Some taxpayers want to minimize expenses associated with the audit. Other taxpayers want to prevail through the successful challenge of tax authority policy or the facts determined by the auditor even though the payment of the assessment may represent a lower current investment of time and money than mounting a challenge. Taxpayers must identify their goals, communicate them clearly to service providers, and listen to the feedback given by their advocates. Listen to, understand, and question how your service provider is going to achieve your goals. Ask yourself:
- Do the arguments being advanced on your behalf make sense?
- Have you engaged someone because they told you what you want to hear?
- Do you fully understand your probability of success?
- If you were sitting on the other side of the table listening to your case, would you prevail?
- Are you prepared to pursue the matter through the administrative process and through all levels of state court, including the appellate level and the state Supreme Court?
- Can you afford to pay the deficiency and third party advocates as you fight the assessment?
If you weigh all the pros and cons and wish to proceed, the challenge is appropriate. If you do not understand the process, the costs, and potential of success, don’t proceed until you do. Advocates are not miracle workers. If there is nothing on which a successful challenge can be mounted, you probably will not prevail. It is a nightmare for all parties when a taxpayer has unrealistic expectations because the taxpayer is usually dissatisfied even if their advocate has performed well.