Advocates typically share the plan of action for addressing audits. We engage with clients as much as the client allows. As the taxpayer, it is your right to ask questions, understand your matter, and be involved in decisions that will directly impact your company and/or your job. Ask how your advocate is going to approach the situation. Understand the basis of any challenge. Ask how your position will be proven.
Every taxpayer has the power to determine the cost of an audit. The taxpayer determines the documentation to be presented before the audit begins. The auditor and your advocate base taxability conclusions on the source documents generated and presented by the taxpayer. After the audit, the taxpayer determines if they wish to pay the deficiency or challenge audit findings. The taxpayer determines how far in the administrative process the challenge will proceed.
Determine the best course of action with your advocate. The plan should be fluid. Expect the plan to change. Know how you define “victory” and make sure that all actions taken move you in that direction. Be prepared to compromise. Listen to your advocate, have them present legal precedent, lay out the case for your edification, and communicate with them freely. Listen to your gut. When your instinct (or advocate) tells you that you probably won’t get a better result, really listen. The degree to which a finding is challenged is ultimately the taxpayer’s choice.
Sometimes David does slay Goliath. But remember David employed a plan, practiced his craft, and employed his plan against a mightier (but unprepared, overconfident) opponent.