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Small-business advice: Don't face IRS auditors alone

If the IRS is auditing you, get professional representation. Also: What should employees do when customers give them flak?

May 30, 2011|By Karen E. Klein

Dear Karen: You answered a question about getting an IRS notice. What if you're being audited?

Answer: Get professional representation. Your accountant or attorney can determine precisely what information is being requested, whereas your presence at an audit invites incomplete or off-the-cuff answers that could raise additional issues, said Larry M. Elkin, president of Palisades Hudson Financial Group in New York.

"Do not extend the statute of limitations if you are asked," he said. Waiving the statute allows the auditor to drag out the process, inflate your cost for representation and increase potential interest and penalty charges; you get no benefit.

If you owe back taxes, penalties and interest, pay up quickly. "If an auditor raises an issue in which you clearly are wrong, concede the point. Owning up builds credibility and shows the agent that you are making a good-faith effort to comply with the law," Elkin said. That credibility might earn you the benefit of the doubt on other issues, such as minor gaps in your records.

Absorb flak from unhappy clients

Dear Karen: How can I train employees to take flak from customers?

Answer: They should make sure they understand the complaint fully. This may involve separating emotion from facts, said Bill Rosenthal, chief executive of Communispond Inc., a corporate communications firm in New York.

"Acknowledge the person's feelings and your concern about the problems that ensued. It isn't a sign of weakness to express sympathy for the hurt or anxiety your actions caused; it shows confidence and strength," he said.

Your employees should accept blame without excuses and tell clients what they are doing to correct the problem.

Small-business questions? Email Karen at

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