When you find yourself face-to-face with an IRS auditor?
Keep your temper. "An auditor will mirror the attitude of the person coming in," says tax adviser Mike Tuchman. "If you're rough and belligerent, the guy will be a stickler. If you go in with a 'You-can't-do-this-to-me-attitude,' he'll do it to you."
Watch what you say. "The more the taxpayer talks, the more the auditor is going to learn," says former IRS auditor Mary L. Sprouse. "An auditor tries to put a taxpayer at ease," which is one way to loosen tongues. But don't be "too noncommunicative. You're going to hurt yourself."
Don't try to play on an auditor's sympathy. "It doesn't work," says Sprouse. "An auditor becomes fairly cynical after a time. They've heard it before. It's too hard to believe everyone who comes in has this many problems." Because rules require it, she once went through with an audit even though the taxpayer told her he had only six months to live. She reported $200 more in taxes due, "knowing he wouldn't live long enough for us to collect it."
Don't display false friendliness. The auditor won't believe you, says Tuchman, but will think: "What in the hell is this guy acting so friendly for in an audit."
Have your records in good order. If you've got proof, says Sprouse, then the auditor is going to allow your deduction. Often that's easier said than done. One hint for next year: Toss receipts and other records in a shoe box. At least, she says, they'll be in one place.
Have alternative documentation for missing records. If you contribute cash to the church, for example, a letter from the minister saying you attend Sunday services regularly may convince the auditor you dropped $2 a week in the offering basket. "It increases your credibility," says Sprouse. "You may get something."
Use common sense. "Sometimes a taxpayer brings in a paper bag of receipts and dumps it on the desk in no particular order," says Sprouse. "Then the person sits back and dares the auditor to proceed. The auditor is human. They try to be neutral, but they'll react as anyone else."
Be persuasive. If you don't have receipts for all your deductions, in some instances the auditor can accept your word. Often, says Sprouse, an auditor will maintain a facade "that she is strict and powerful" in order to restrain control of the situation. "It's a subtle psychological game. But some taxpayers have stronger personalities. The most persuasive person usually wins."
Consider having a tax specialist accompany you. "I have a client who gets upset when you mention the word 'audit,'" says Tuchman. "I keep him calmed down. It's not my money, so I can talk about it more peacefully. Auditors may be overbearing to someone who is nervous and comes in on his own. When you come in with a professional, they're on their best behavior." (Reminder: Most tax specialists charge for the visit to the auditor's office.)
Don't try a bribe. "That's obvious," says Sprouse. One Washington taxpayer invited his auditor out for a concert date. Her response: "I'll pretend you didn't say that."