After I left the practice of public accounting as a CPA I finally realized how I won every audit I ever handled for a client. I estimate that I handled at least 100 audits over a 25+ year career for many different type clients and not once did the client owe any extra money from a tax return that I had prepared. That’s a good track record.
Well my secrets may surprise you. While I want to say I had superior knowledge of the law (my knowledge was good but clearly not superior) and my presence was intimidating to an auditor I would be lying.
Here are my two secrets.
I was very prepared before the audit started. If the IRS agent asked for the receipts on a particular deduction I would be able to produce it within seconds and it matched the number on the tax return to the penny. That gave the auditor a perception that every item he asked for would be substantiated with exact documentation. But the phycological effect was even greater. Each action the auditor asked me to preform I was able, in great confidence, to provide detail. I was building his or her trust in me.
The second secret I really didn’t even know I had until after I began my new career. I was able to connect with the auditors on a very personal level. I would connect in various ways. I always repeated their name. I would always ask them if they wanted me to call them either Mr. or Mrs. and their last name or if they preferred their first name. They always wanted me to call them by their first name.
I would review their office for photos of their life. Family photos of gatherings or of their children. I would then ask them about the photo. They would love to talk about their life. Almost always during this initial phase they would tell me they hated their job and hated to tell taxpayers they owed more money. The auditors have the exact need as everyone else; they wanted to be loved and accepted. It’s hard to be accepted if you tell a taxpayer they owe more money. Every auditor I knew wanted to tell the taxpayer they didn’t owe any more and even loved it more when the client got a refund. Why? Because the client would then “love” the agent, exactly fulfilling the auditor’s need.
I become friends with them in the first few minutes of meeting them and that friendship grew as the audit progressed. That friendship was sincere. I liked the auditors I dealt with and they liked me. That cemented the probable outcome of any audit. Can you imagine telling your friend that they owned money? Subconsciously they couldn’t find any issues! Many returns that were selected for audit had lots of issues. How did over 100 auditors not find any issues in these return? The answer, our friendship.
If you want to win in an audit then find a personable CPA who is knowledgable of the law. I was fortunate to be very creative too. This helped craft solutions that saved my clients lots of money. I loved getting “no change” audit reports and then telling my client that I really had to battle to win. Little did they know that I had the easiest time making friends with a new IRS auditor!
The moral of the story is that it pays to be a very friendly smart guy who connects with others on a deep level.
Makes me wonder if I need to go back into the CPA audit business!!!!! NOT