Well, last week Nina Olson, who’s the National Taxpayer Advocate at IRS, came out and stated that the real audit rate in the United States is 6.2%, not 7/10 of 1%. Just to put that in perspective, 7/10 of 1% equates to just over a million audits, and 6.2% equates to nearly 7 million audits. So who’s right? Who’s wrong?

How do you turn that into a marketing opportunity? Here is what the IRS is doing. Their headcount has been decimated over the last 3 or 4 years. It’s down by 23%. So more and more, the IRS is relying on technology, and their computers are generating automatic notices. 70% of the time they’re incorrect.

But here’s what the deal is, the IRS knows that there are much less protection rights for taxpayers when they send out these under reporting notices or these math error notices. There are no appeal rights with those. Not like in a real audit where you can appeal it. So your clients are getting all these notices to the tune of 7 or 8 million notices a year that the IRS doesn’t consider an audit. But to you and to your client, if they’re questioning an item on their return, that’s an audit.

So when you’re talking to your client about your Audit Protection Plan, it’s important to let them know that you’re handling all of these notices, not just audits. It’s very, very important. And the IRS is going to be sending more and more and more of these out as years go by, especially with the new Tax Reform Bill that was just signed and that’s effective in 2018. So take that information. Use it in handling objections. Use it as a marketing strategy that the IRS is sending out all these notices, which in fact is very, very true. You have to defend and resolve them. Your time is valuable. You’re either going to charge the client on an hourly basis or with one low annual fee in your Audit Protection Plan, which takes care of responding to all of these notices.

Have a question? Contact Michael Rozbruch.

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