Worry, stress, frustration, and that sinking feeling of \u201cwhy me?\u201d\u2014that\u2019s almost every taxpayer\u2019s first reaction when they find out they\u2019re being audited. And with good reason: taxation is a complex field, and audits are often risky, protracted, and costly affairs.<\/p>\n\n\n\n
While it\u2019s impossible to predict the length or scope of an audit, you can often greatly mitigate its impacts, and even its tax consequences, through careful, proactive management.<\/p>\n\n\n\n
Here are some ways to manage the process effectively:<\/p>\n\n\n\n Take an active role in managing your file. You know your business better than anyone and should carefully prepare or review any documents sent to the authorities. Presenting clear, consistent, and accurate information is paramount.<\/p>\n\n\n\n Auditors don\u2019t know the ins and outs of your industry. By painting a clear, coherent picture of your business<\/strong>, you can prevent misunderstandings and help your auditor apply the proper tax rules to your situation.<\/p>\n\n\n\n
It\u2019s important to remember that in a tax audit, the burden of proof generally falls on the taxpayer<\/strong>. This means you are responsible for proving that your tax position is sound, rather than the reverse. From the moment you receive the audit notice until the audit closes, every interaction with the tax authorities can directly affect the outcome of your case.<\/p>\n\n\n\n1. Get involved<\/h3>\n\n\n\n
2. Paint a coherent picture of your business<\/h3>\n\n\n\n
3. Centralize communications<\/h3>\n\n\n\n