| Being audited? You need help! The most important | | | | Recommendation #3: Make sure you have all the |
| help I can give you is to adjust your mental state. Then | | | | facts from CRA/IRS regarding your situation. |
| maybe, just maybe, you can listen to some good | | | | It is very important that you have the same information |
| advice about not just surviving, but enjoying and | | | | as they have in order for you to understand where |
| possibly flourishing in a tax audit. That's right, enjoy it as | | | | they are coming from. Without it, you will eventually |
| it should be a learning process to help your business | | | | loose, as they will have the Income Tax Act or the IRS |
| with better controls. Better controls means more | | | | code on their side. Your chance for negotiating and |
| money for you! | | | | correcting things can happen when you have the |
| Panic? Throw up? Run for the hills? These are typical | | | | same information. This will help both you and them so |
| responses to a letter from the tax man. A letter from | | | | that you can both agree at the same time. Ask for |
| the tax man is not your typical letter, but it is definitely | | | | your information. You have a right to it and it will make |
| memorable to read the words "Tax Audit" followed by | | | | you feel so good... |
| a date you have to prepare your books and records | | | | Recommendation #4: Things went bad with my call to |
| for review. Yikes! | | | | the tax auditor. |
| Rest your mind and don't panic, you too can more than | | | | CALL AGAIN! Things can go wrong for a number of |
| survive a tax audit. People do every day. The secret | | | | reasons. Who knows who your contact person spoke |
| to "flourishing in your tax audit" is to not believe the | | | | to before you called. Maybe they weren't as nice as |
| misconceptions out there. The list below is the most | | | | you. Please make sure you are relaxed before calling |
| popular misconceptions I have heard from clients. | | | | back. Wait at least 24 hours from your previous bad |
| Misconception #1: The tax man is out to get me! | | | | call. Start your next call off by letting him or her know |
| It is the CRA or IRS's job to randomly audit businesses | | | | that your intent is to work with them. Apologizing for |
| on a yearly basis. They choose businesses with a | | | | the previous situation is extremely helpful to you, even |
| lottery type system and you could be one of the | | | | though you may be the one who deserves the |
| chosen ones. At the end of the day, tax authorities | | | | apology. Remember, you want them on your side. |
| collect information, check for accuracy, makes | | | | If these 4 recommendations are not helping you or the |
| necessary adjustments and they keep & update | | | | audit is too complex, you need some professional help. |
| statistics. It is not personal and they are not out to get | | | | Time to talk to your accountant. But and that's a big |
| you. You never know, you could get some money | | | | "but!" Be sure you have the right accountant to work |
| back! | | | | with. The wrong one can cost you in some many |
| Misconception #2: I received another letter from the | | | | ways! |
| tax man. It must be really bad now. | | | | Are you the right accountant for me? |
| If you receive additional mail from the CRA or IRS, | | | | Question #1: Do you specialize in representing your |
| please don't automatically assume that there is | | | | clients with tax authorities? |
| anything wrong. Just pretend you received mail from | | | | Just because someone is an accountant or an |
| any other company and check their accuracy. The | | | | accounting firm doesn't mean that they want to work |
| people at the CRA or IRS are human just like anyone | | | | or have worked with the CRA/IRS. This is no different |
| else and they too can make errors... | | | | than with a doctor. There are doctors who are |
| Misconception #3: The tax man will garnish my | | | | generalists and there are doctors who are specialists. |
| account or worse, they will take all my money. | | | | Make sure you use the one you need for your |
| All they are interested in is getting paid just like any | | | | situation. Just ask them if they want to work with the |
| other creditor. Of course, they have more power than | | | | CRA/IRS. Their response to this question should tell |
| your average creditor, but they will work with you as | | | | you everything you need to know. If in answering they |
| long as you WORK WITH THEM. Not working with | | | | hesitate, FIND SOMEONE ELSE! |
| them can cost you additional interest and penalties. | | | | Question #2: Can I contact your clients who have |
| Eventually, you may be garnished for not cooperating. | | | | worked with the CRA/IRS and have worked with you |
| Misconception #4: I will end up paying more money just | | | | on an audit? |
| by talking to them. | | | | If someone has worked with clients on CRA/IRS |
| The only way that you could end up paying more tax | | | | issues, they will have a track record. The best way for |
| dollars is if you actually do owe them. It is not the task | | | | you to know is to contact prior client(s). The |
| of the CRA or IRS to automatically assume you owe | | | | accountant will most likely have to get the permission |
| them more. They have to have a basis for every | | | | of the prior client(s) before you can speak to them. |
| dollar they say you owe. If you keep neat and tidy | | | | Question #3: What kind of track record do you have |
| records, have back up for your deductions and file on | | | | with tax audits? |
| a timely basis, chances are that you do not owe | | | | Before you hand over your life to anyone, I would |
| anything in addition to what you have already paid. If | | | | highly recommend that you check "the fruit on the |
| you don't keep good records, you may need to get | | | | tree". It isn't enough for you to just assume any |
| some help and make your life easier. | | | | accountant or accounting firm can deal with your |
| Misconception #5: The tax man will not help me. | | | | situation with the CRA orIRS. Be prepared to interview |
| The fact is, you can call them for free on many of | | | | at least three (3) candidates. Treat the interview |
| their TOLL FREE numbers. Now why would they | | | | process similar if you were going to hire someone. |
| make it easy for you to call if they didn't want to help | | | | Come prepared with questions. Do your research |
| you? Afraid of phoning, don't be. You can also just go | | | | beforehand. |
| to their website and search out your question. Just | | | | Question #4: My business has not been very good at |
| Google CRA or IRS and they are usually right at the | | | | record keeping. Can you help me before I meet with |
| top, no competitors to knock them off the top. Their | | | | the auditor? |
| websites are amazing and very helpful. | | | | You would think that accountants would take on a |
| Misconception #6: I have already paid my taxes and | | | | client in need of straightening out. Many don't and the |
| now they say I owe more. Will this ever end? | | | | reason is directly related to how long it will take and |
| If you paid your outstanding amount by the due date, | | | | how much time they have. Alternatively, the CRA/IRS |
| the tax man has most likely made a mistake. Yes, | | | | will create your books for you. You will still need a |
| they do make mistakes. The CRA or IRS employees | | | | qualified, experienced, person to make sure that the |
| are people, just like you and me. In order to clear things | | | | result is not one sided, in their favor. The benefit of this |
| up, you will need to contact them. The people at the | | | | approach is that the CRA/IRS will not charge you for |
| CRA and IRS are quite friendly and helpful. Just explain | | | | organizing your books. You will only have to pay for |
| your situation and they will correct any error(s) they | | | | the additional independent accountant's time. This may |
| have made. This also includes anything that has | | | | sound like a strange approach but it will save you |
| accumulated additional interest and penalties that you | | | | money. Just make sure you choose the right |
| should not be paying. Just be clear and relaxed when | | | | accountant to supervise the tax man. |
| you speak. Remember to breathe... | | | | Question #5: Can you explain these tax issues to me |
| What to do when you call the CRA or the IRS. | | | | in layman's terms? |
| Recommendation #1: Be proactive and be first to | | | | This is a great question to ask to see if the accountant |
| make contact with the tax man. | | | | you are considering is someone you can work with. If |
| I am amazed at how often people sweep things under | | | | all you get is a bunch of sections and subsections of |
| the carpet. I have been guilty of this in the past and | | | | the Income Tax Act or IRS Code, BEWARE! |
| have found that things go more in my favour when I | | | | Knowledge of the Act or Code is helpful. Applying, |
| take the initiative and call the CRA or IRS. If you wait | | | | researching information and explaining it to the client in |
| too long, your time for negotiating with them is | | | | an understandable way is more important. If your |
| shortened and they won't give you a lot of additional | | | | candidate can't do this with you the client, how do you |
| time. | | | | expect anyone at the CRA or IRS to understand |
| Recommendation #2: When making contact with the | | | | them? Simplicity here is by far the best approach. |
| tax man, ask the PERSON on the other end for their | | | | No one likes to get audited, but this experience can |
| name and remember to thank them when they help | | | | help you to learn new things about your business. It |
| you. | | | | can help you to develop a better relationship with your |
| The sweetest sound to any person is their name and | | | | accountant and it can make you more confident when |
| being appreciated. You will be in a better position if you | | | | dealing with tax authorities. Do your best to find the |
| treat any collector like the human being that they are. | | | | positive in this tough situation. You will be rewarded |
| Just remember, it is a job that they are doing. There is | | | | with a strong business and greater control of your |
| no need to make it harder for you or and for them... | | | | success. |