10/09/2024

Decoding IRS Audit Guidance for Better Compliance

Consider applying these tips

Typically, Internal Revenue Service (IRS) examiners conduct thorough research before meeting with taxpayers and their representatives. This preparation often includes reviewing relevant Audit Techniques Guides (ATGs), which focus on specific industries or common audit-triggering business transactions. Although ATGs are designed to assist examiners, they are also publicly available, providing small business owners with valuable insights into potential audit issues.

Auditor Specialization

In the past, IRS examiners were randomly assigned to audit taxpayers from all walks of life, with no real continuity or common thread. For example, after an examiner audited a dentist, the next assignment he or she received might have been a fishing boat captain or a convenience store owner. Therefore, there was little chance to develop expertise within a particular niche.

To remedy this, the IRS created its Market Segment Specialization Program (MSSP), which expanded rapidly during the 1990s. The MSSP allowed IRS auditors to focus on specific sectors. Through education and experience, examiners became better equipped to identify and detect noncompliance with the tax code.

Please select this link to read the complete article from OSAP Mission Partner Clark Schaefer Hackett (CSH).