Sandy Botkin 11-16-06 - The Audit Process: Play Now | Play in Popup | Download (248)

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The Audit Process

Host: Steven Marshall, CEO Strategic Equity
Guest: Sandy Botkin , Founder, Tax Reduction Institute

Everyone cringes at the idea of an audit. But it is more an intimidation factor than a reality for most people. You have about
a 3 percent chance of being audited in any given year. And if you are audited, 90 percent of the time you will get a refund,
no change or split the difference. With those odds, you should be aggressive in your filings or you are wasting as much
as a million dollars over your lifetime. How do you find a tax consultant who shares that philosophy?

Ask:
• What designations or credentials do you have? (Tip: look for ex-IRS agents and attorneys or at the least certified tax preparers)
• Are you a full-time tax accountant?
• How many years have you been in the business?
• Can you provide references from other industries?
• Do you use a checklist to maximize deductions?
• Are you conservative, aggressive or in between?
Of course, you don’t have to hire an accountant, but it is good insurance to have your return prepared using a major accounting firm because the IRS has found that people who do their own returns using packaged software have an 11 times higher chance
of error. That means they are more likely to do an audit.

You could also call the IRS for answers to your questions, but they won’t stand behind the answer unless you have then following:

• Name of the person you talked to
• Badge number
• Date of the call
• Question asked
• Answer.

Only if you have these items will they will waive penalties incurred if you received bad advice from an IRS agent. Other ways to reduce your chance of audit include:

• Send your return certified, return receipt, electronic filing or Federal Express to ensure it doesn’t get lost
• Sign your return
• Report all income under the correct entity
• Always keep your paperwork as if you will be audited.

If you are audited:

• Don’t panic
• Bring only the records related to the item the IRS requested– don’t bring everything
• The burden of proof is on you so have good documentation
• Dress normally — don’t dress up or down
• Send your accountant in your place if possible
• If you go, say only four things -yes, no, I don’t know or its my accountant’s fault
• Be on time or early
• Be organized
• Don’t tamper with evidence
• Don’t die
If they send a special agent, don’t talk to him. Get an attorney. That would mean they could be investigating you for fraud, which is very unlikely, considering there are basically three things that would result in criminal charges:
• Failing to file a tax return
• Not reporting income knowing it was wrong
• Taking a deduction knowing it was illegal

If they try to file criminal charges, then the burden of proof is on the IRS. Usually, if they disallow a deduction, you pay a fine

Steven Marshall is the CEO of Strategic Equity, a company dedicated to helping loan officers make the transition to certified mortgage planners. Steven coaches and mentors loan officers how to differentiate themselves using strategic mortgage planning through his Strategic Equity programs.

Sandy Botkin is a CPA and attorney. He is a former IRS trainer and founder of the Tax Reduction Institute. He is the author of “Lower Your Taxes Big Time” and “Real Estate Tax Secrets of Rich.” This is general tax advice. Everyone’s situation is different, so take this information and ask your accountant.

 

 tom rumble: Play Now | Play in Popup | Download (236)

The state of Michigan is in a challenging economic situation at present, but Tom is doing well in spite of the economic conditions. He has been in the real estate business for 7 years and was in corporate sales prior to that.

Tom’s average sales price is $225,000 and he carries fifty to sixty listings at any given time. He estimates that 25% of his business is repeat and referral.

ASSISTANTS

There are two assistants on the team and a buyer’s agent currently in training.

The mortgage lender partnership is important for Tom. He observes that knowledge and communication are the primary factors for him. He looks for a true connection with someone that can “dazzle” him with new and useful information.

SYSTEMS

Tom uses a Buyer’s Package when meeting with a buyer. He brings comps and makes it clear that it is not just one of his listings that he wants to sell.

Tom uses Top Producer as his Customer Relationship Manager (CRM), and has 8 websites that account for 20% of his business.

Tom is a prospecting machine, and focuses nearly all of his energy on generating leads. To illustrate the point, he has had new office space for the last 6 months yet he states that he hasn’t spent more than two hours there in that period. His observation is that “When

I’m there, nothing is happening.” Tom is looking for prospecting opportunities everywhere. .. from the FSBO to the corporation.

MARKETING

Tom takes advantage of his name recognition and works significantly on branding. A specific focus is on the importance of signs. Tom likes to get as many signs around a listing as possible. He also makes it a point to always ask permission to put signs on other corner lots. He has never been turned down.

Even in this current “down market” Tom always runs a 2/3 -page newspaper ad.

KEY ELEMENTS OF SUCCESS

Focus - Tom contends that much of his success is based on the mindset: focus on the units. “One Hundred Transactions Per Year ” is his current focus. Tom observes that while he focuses on units he also remembers that each one includes a family with specific needs. From those perspectives come the referrals.

Accountability - Doing what you say and following through as well as calling a client right back are Tom’s basic tenets for success. He guarantees what he does, meaning that if he makes a mistake, he pays for it. Period.

Service - “Whatever it takes” is essentially Tom’s approach to great service. As an example, he cites a current client that is on hospitalized maternity bed rest, but she wants to be at the closing. Tom’s solution is that all players will meet at the hospital to facilitate a timely closing and satisfy the client’s wishes.

Attitude - Tom’s positive attitude is another big key to his success. In a market where most discussions center around the negativity of current economic conditions Tom is positive, optimistic and pleasant.