At a recent IRS conference, I heard a colleague of mine mention that she completed over 500 IRS audits for her clients. This is a huge number, considering that each IRS audit takes several days, sometimes weeks, of preparation and dealing with the auditor. Intrigued, I sought her out during a break to find out more. What I learned is bad news for YOU.
This CPA lady receives her IRS audit work from an insurance company. Have you seen those $39 or $59 offers of “IRS audit insurance” from TurboTax or from your local office of some national tax chain? For this very reasonable fee, they promise you to bail you out if the IRS comes knocking on your door. So what happens in reality? You got it! They send IRS audits to this lady and many others like her.
The CPA lady is paid about $500 by the insurance companies. For a CPA like her, this is no more than 5 hours worth of pay. 3 hours is the minimum duration of an IRS meeting. Do the math. This leaves her 2 (TWO!) paid hours to do all the preparation work. How do you manage to prepare for an IRS audit in 2 hours?
This is how. The client – this would be YOU – is directed to a web portal. You’re supposed to organize all your data like receipts, bank statements and such, scan it all, and then upload into the web software. The CPA will simply print it all out and deliver to the IRS auditor.
Will she explain you how to organize documents? No, no time for that. Will she ask you if something is missing? Nope, no time for that, either. Will she ask you anything, period? Will she argue with the auditor on your behalf? Will she look for your best interest? Got the picture?
See, if you had all your ducks in a row, you either would not be audited at all, or you would be able to defend yourself, right? If you ask for help, it means you need help. And this is anything but. You do get what you pay for. Always.