What Can Trigger an Automatic IRS Audit?

Here’s an interesting tidbit that was uncovered at last November’s 2013 AICPA Forensic & Valuation Services Conference. IRS audits can be triggered when the same firm does a client’s tax work and valuation work. It was indicated that IRS agents in some areas will pull an estate and gift tax return that is prepared by the same firm that prepares the attached valuation report. A poll of attendees at the conference indicated that approximately 60% of CPA firms that have qualified business appraisers on staff regularly provided both valuation work and tax work to the same client. Thus, to help mitigate client risk, advisors may want to make sure that the client hires a qualified business appraiser that does not work for the CPA firm that is preparing the gift tax or estate tax return.

 

John G. Mack, ASA, MCBA, ABAR – Nationwide Valuations – (303) 496.0643 (direct) (303) 586.4554 (fax)
john@nationwidevaluations.com – www.nationwidevaluations.com