Believe: It is Possible to Stop an Incorrect Assessment
It is better to help the auditor get the right answer (that is, assess the right amount) than to watch the auditor arrive at the wrong answer and then spend months or years fighting to convince someone else to overrule the auditor and lower the assessment. If you believe that the auditor will make a mistake and do not give the auditor the information he/she needs to make a correct calculation, then the auditor will make a mistake. If you think the auditor does not understand your business and do not explain your business, then the auditor will not understand your business. If you think the auditor does not understand the law and you do not explain the law to the auditor, then the auditor may make an error in law.
However, if you take a positive approach from the start of the audit to help the auditor make the correct assessment, it is more likely the auditor will make the correct assessment. If you take time to educate the auditor concerning your business, the auditor is more likely to understand your business. If you undertake the effort to explain the facts in a simple and organized manner, it is more likely that the auditor will see the facts from you point of view. If you take the time to know the law, it is more likely that you and the auditor can productively discuss the law.
For example, in a recent case, a client called saying that the auditor had informed the client that she would be coming with a significant assessment in a few days. After a little positive effort on our client's part, she was informed last week that there would be no assessment. The client had prevented the incorrect assessment by taking steps to correct misunderstandings. Merely saying to an auditor that she/he is stupid will not stop the assessment. The client worked with us to organize the facts, research the law, and come up with valid arguments that the auditor (and her supervisor) could accept.
If the client had not acted quickly to become as prepared as possible, the assessment would have been issued. If the client had not taken a positive attitude and approach to change the outcome, the assessment would have been issued. If the client had not believed she could stop an incorrect assessment, it would not have happened.
Cyndee Todgham Cherniak is counsel to and in affiliation with the International Trade Law and the Tax Law (Commodity Tax
