The first speaker today was Kay Cruson, our accountant and tax preparer, in Lakewood, Colorado. Recently, Kay has been mentioning the term “audit” a couple times during the last couple meetings. She is currently involved in three audits, with different entities, different issues and hopefully with favorable outcomes. There are three types of audits – internal, operational and compliance.
The Internal audit is an independent appraisal established within an organization to examine and evaluate its activities as a service to the organization.
The Operational audit is a comprehensive examination of an operating unit or organization to evaluate its performance, as measured by the management’s objectives. This uses operating controls and activities such as purchasing, data processing, receiving, shipping office services and advertising.
The IRS, state and sometime local taxing authorities and insurance companies will request an audit. There are three types that they incorporate into the audit system.
• Mail audit – you receive a letter from the IRS requesting documentation with 30 days to comply. This is by far the least expensive.
• Office audit – this is where the IRS requests you to appear with documentation in their office. This isn’t that expensive, but it is best to have an attorney or your tax preparer with you.
• Field audit – this is when an IRS agent comes to your office and does the audit there and going through all of your records. This is by far the most expensive.
Kay has several ways to relieve the stress and fear of being audited.
1. Collect your paperwork throughout the year, especially information provided to you in envelopes that are marked “important tax documentation enclosed” or OMB “Office of Management and Budget.”
2. Do Not Use A Shoebox!!
3. Retain all documentation for at least three years (Kay recommends four), unless there is an amended return filed, or an audit, then add three more years to the date of the event. Keep all permanent files legal documents for a home, divorce or capitol improvements.
If you are audited here is what Not to do:
1. Do Not Ignore the mailed notices.
2. Do Not freak out – contact your tax preparer and they will guide you with what to do next.
3. Follow though with what your tax preparer tells you to do.
What to do:
1. Read the notice to confirm that there is an issue.
2. Forward all documents from the IRS to you tax preparer.
3. Sign a Power of Attorney for your tax preparer and look for resolution or next steps.
If it becomes an audit:
1. Produce the documentation that were used to prepare taxes, labeled and organized files save time and impress the IRS agent.
2. Stay in contact with the IRS and your tax preparer and complete all actions that are requested of you.
3. Watch for red marks on documentation from the IRS this is generally the area you need to focus on.
Audits are performed by taking the population (all the documentation available) and pulling a sample (just a few documents) and confirming the accuracy. The larger the inaccuracy in the sample, the larger the sample can expand and the chances of having a favorable audit is reduced.
Kay has had quite a bit of audit experience over the years:
For a non-profit that had internal audits every six months in preparation for the yearly tax returns.
Payroll audits for workman’s comp insurance – sometimes by mail – however occasionally there have been a field audit.
Sales tax audits – made the records available, filed the appropriate forms and the sales tax was actually overstated.
One auditor stated, “very good, but I have to find something wrong to record that I did my job” That something wrong was insignificant.
As an accountant and tax preparer, going through various audits in different stages has been very educational for Kay. Sharing the knowledge helps her affirm how records should be kept, the ease of producing a document when an auditor doesn’t expect it to be produced as well as learning how taxing authorities analyze that information.
So if you are looking for an accountant and or tax preparer that can help you through getting your books in order as to prevent an audit or you need someone to help you through an audit give Kay Cruson a call.
Kay Cruson * Accounting & Tax Prep * 303.937.3468 * email@example.com
Our second speaker today was Debbie Hansen, owner of La Dolce Vita Coffee Shop in Olde Town Arvada, Colorado. Debbie took her time today to speak about what makes La Dolce Vita Coffee Shop unique. First after years of fund raising, Debbie has started focusing on getting the pull tabs off soda cans for the Ronald McDonald Houses and she also collects box tops for the school system. In both cases she finds the right places to take those to so they are used properly and not just thrown out.
Secondly – all of the food the La Dolce Vita offers is made fresh daily and 98% from scratch, from the cookies to the biscotti. They get their vegetables from the local Farmer’s Market during the summer from blueberries to zucchini. The meats that are used on the sandwiches are source locally and carved int the store. Debbie also uses a local source for their ice cream! The coffee that they use is from the Coda Coffee Company – which ethically sources beans from around the world to provide fantastic coffee beans in Colorado.
Lastly – Debbie serves on several boards in her community to work to improve Arvada and the Olde Town District – keeping it safe and clean for those coming to visit.
If you are looking for a neighborhood coffee shop – where when you become a regular, your coffee will be ready when you reach the counter, visit Debbie Hansen and La Dolce Vita Coffee Shop in Olde Town Arvada!
Debbie Hansen * La Dolce Vida Coffee Shop * 303.456.8919 * 5756 Olde Wadsworth, Arvada, CO 80002