Audit Method Guides (ATGs) are on-line publications that assist IRS examiners throughout audits by offering perception into points and accounting strategies distinctive to particular industries or sure tax write-offs. They aren’t an official pronouncement of the legislation or the place of the Service and can’t be used, cited, or relied upon as such. Whereas ATGs are designed to offer steerage for IRS workers, they’re additionally helpful to small enterprise house owners to grasp the place IRS examiners look when auditing. There are greater than 4 dozen ATGs. Listed below are some to take particular notice of—or ask your tax adviser about.
Latest guides
ATGs are usually not simple or enjoyable studying. Enterprise house owners might not perceive the technical tax steerage within the ATGs, however ought to be conscious that they’re written in order that brokers can perceive them. The ATGs give concrete instructions to brokers about what they need to taking a look at throughout audits. For instance, a number of years in the past, a information related to pizzerias instructed brokers to take a look at how a lot flour was bought so they may compute what number of pizzas have been bought—and the way a lot income ought to have been reported primarily based on the enterprise’s value per pie. Very particular.
A few of the current ATGs are listed right here. They’re present by the revision date famous.
Attorneys Audit Method Information (1/11/22). The information supplies data to allow examiners to audit points pertaining to attorneys. This implies taking a look at their accounting programs, together with time and billing software program. It additionally means taking a look at financial institution accounts, together with these labeled “belief accounts” for shopper, and the way fund are held.
Baby care supplier (1/11/22). Examiners are directed to take a look at the several types of childcare suppliers, together with these by kin and associates, household daycare, in-home care, babysitters, and others. It directs examiners to look particularly at automobile bills, meals bills, and deductions for enterprise use of the house.
Development trade (4/19/21). This ATG covers all varieties of contributors within the building trade: contractors (prime, normal, and subcontractors), building managers, architects and engineers, materials suppliers, building lenders, surety corporations, and others. It explains to examiners the varieties of contracts which can be concerned, together with short- and long-term contracts, cost-plus contracts, time and materials contracts, unit value contracts, and extra.
Leisure audit approach information (3/20/23). It helps examiners perceive the terminology and jobs throughout the leisure trade. For instance, people can operate in numerous job titles on completely different initiatives. A taxpayer could also be a property grasp on one challenge and a “prop man,” assistant property grasp, or a set dresser on one other. Many actors are additionally administrators or producers, typically on the identical challenge. The examiner should work out the duties of a taxpayer in regard to every challenge to find out whether or not bills are atypical and needed (i.e., deductible). It directs examiners to look particularly at private bills, together with wardrobe, make-up, bodily health, and safety.
Retail trade (3/5/21). This covers a variety of companies, together with grocery shops, on-line retailers, liquor shops, cell meals distributors, fuel stations, automotive dealerships, auto physique restore outlets, direct sellers, and even retailers doing enterprise internationally. It directs examiners to take a look at the books, together with how stock is reported, and bills which have been deducted. The particulars for examiners differ significantly with the kind of enterprise concerned.
Sampling of older ATGs
As I discussed earlier, there are greater than 4 dozen ATGs. A few of people who have been posted previous to 2021 that could be of curiosity to your enterprise might be discovered by looking out by this record.
Remaining thought
The IRS has deleted some older guides. For instance, there was a information on money intensive companies; it’s not posted. The IRS updates their guides every now and then, so remember to verify the revision dates earlier than taking the steerage to coronary heart.
