Glendale Auction House: Surviving An Audit

We joke about it, rearrange Glendale auction business practices to avoid it and live in fear of it - that dreaded five-letter word A-U-D-I-T

. But it is inevitable that in the Glendale auction industry that is full of cash transactions and tax-exempt resellers, your Glendale auction business will probably be audited. I am not wishing this on you or even your worst enemy, I am just warning you that it will likely happen.

Following are some survival guidelines to make the process easier: You will receive notice that your Glendale auction business is being audited - this notice will either come by mail or most likely in a phone call from a field auditor. If you have an accountant, give the auditor your accountant's phone number and address and ask them to work directly with the accountant. If you don't have an accountant now is the time to hire one. It is impossible to survive the process without an intermediary such as an accountant.

Make sure you hold onto all copies of correspondence you receive from the auditor or from your accountant. Make notes of any phone calls you receive or make regarding your audit. And if you live in a state where it is legal to tape record phone calls, you should record any conversation that you have with an auditor. Auditors are people who benefit from misunderstandings and manipulation of facts, make sure that this is not the case in your audit by journaling all your contact with the auditor.

Try to be cooperative with the auditor's requests but not at the detriment of the Glendale auction business. If the auditor continues to make requests of you that you can not keep up with, write a letter to the auditor's supervisor and make an appeal for the benefit of your Glendale auction company. The auditor's main goal is to get any unpaid tax from you, if you close your doors because all you are doing is working on your audit, the auditor's goal has been defeated. It is my strong recommendation that you don't meet the auditor.

Don't open your Glendale auction business and allow them to conduct the audit at your location - make them go to your accountant's office to conduct their audit. Remember that auditors are a sub-class of human beings and don't think like anyone that you have encountered before. They are not your friends and they are not there to help you. Finally, I suggest that you get involved in a stress management activity. I have found boxing bag practice to be an effective stress reliever.

I am a survivor of an audit. The process took over six months and 6,000 plus pages of documentation. I was audited for four years of auction transactions and had to produce every tax-exempt form my Glendale auction company has ever received. When it was all over the auditors made no changes for which I am truly grateful and I guess I should leave it alone. But I was surprised by the power of an auditor to look at any and all transactions of a Glendale auction company.

I was equally surprised to find out that the stereotypical idea you have of an auditor is not only true but also understated. This process cost my Glendale auction company thousands of dollars in accounting fees and unknown dollars in lost business because of the work the audit required. I hope these few tips will save you some of the heartache and expense of an audit.

by: Deb Weidenhamer

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