IRS Business Tax Audit Success — IRS examiner overruled


We love sharing success stories from people we've helped; in this particular case we had our patience tested by a, let's say, "ill-tempered" IRS agent. 


Max and Audrey sold a daycare business they both owned in 2010. In 2012, the IRS selected them for audit. Initially, Max and Audrey thought they could handle the audit themselves, but as the auditor turned more and more surly, their gut was telling them that this auditor was "out to get them." While auditors are supposed to remain unemotional, unfortunately, we've seen them take things personally and turn on a taxpayer. Max and Aubrey contacted us to help them with the business audit of their daycare, along with rental real estate.​​


They had limited access to current records due to the sale; additionally, many archived records were thrown out due to flood damage, but the IRS agent still demanded that they somehow produce everything. We've seen this happen so many times; records are lost or destroyed and the taxpayer feels like there is no hope. But alas, there is. Our Team reconstructed their financials into tangible reports, employing estimates and trending data as needed.


Still…the auditor assigned was not satisfied. She ruled against everything we submitted. We knew that we could not get upset at the auditor (or, at least let her know that we were upset!) even when she was clearly wrong. We simply appealed everything the IRS examiner denied. We methodically provided legal support as to why our figures were the most reliable and should be used to calculate taxable income. 


After 2 years of fighting for our client, we managed to have the case reassigned. Ultimately, the new IRS revenue agent was not impressed by the previous auditor's sloppy and arbitrary rulings. This new agent recognized that the IRS examiner was being completely unfair and did not follow the examination guidelines on lost and missing records correctly — and also recognized how diligent we were.


Working with the new agent, we were actually able to turn the tables for Max and Aubrey. Instead of owing the IRS the $250K originally determined, the resulting liability was reduced by over 90%.


Max and Audrey both commented that the original auditor's surliness is what prompted them to hire us. If the auditor had been nice, they admit, they probably would not have looked to hire someone… and they'd have probably been stuck with a tax bill they really didn't owe. If you're facing a business audit, contact us. We can help. 

Names and certain details have been changed to protect client confidentiality.