Question of the Week: Why Does the Auditor Keep Reassuring the Taxpayer Everything is Going Well During the Audit, if There’s Going to be a Large Tax Assessment at the End?
Why does the auditor keep reassuring the taxpayer everything is going well during the audit, if there’s going to be a large tax assessment at the end?
Clients often tell me about the auditor who seemed to be such a nice guy. They say, “He smiled whenever he asked questions, answered all my questions and told me several different times during the audit process that this isn’t a big deal and everything is going very nicely…”
Then in about a month the client receives a huge tax assessment in the mail.*
The short answer: It did go well for the auditor. He got all the information he needed to make a nice tax assessment and you didn’t argue with him while he was there.
The rest of the story: Remember, to you it’s a tax audit. To the auditor it’s an 8 to 5 job and he wants to get the information he needs, trouble-free and avoid as much stress as possible.
Smart auditors always keep the taxpayer (which includes individuals and employers or the employer’s representative) off-guard, relaxed and not feeling threatened during the audit process. This will insure the information flows freely to the auditor. A relaxed and confident taxpayer is more likely to provide the information freely, which makes the auditor’s job easier.
Experienced auditors know that as soon as the taxpayer feels there is a big tax assessment looming in the future the information flow and friendly cooperation dries up, making their job much more difficult.
Remember, no matter how nice and helpful the auditor appears, they are still a government tax auditor and are not your best friend. Even in cases where the auditor is indicating there may be a refund the he’ll still be looking for any items to offset the credit with a liability if possible.
(In my experience about one in every 500 employment tax audits produce some credits or refunds).
* If you are not given an exit interview with the auditor (or the auditor’s supervisor) where you are provided an explanation of the audit findings and have an opportunity to provide evidence in your defense before the tax assessment is issued then your rights have been violated. You should call your attorney, a tax expert, the tax agency’s Taxpayer Rights Advocate, or all three. Make some noise! There are most likely other errors with the audit too. Get someone to help you find them!
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