We received a letter of no change with respect to an IRS restaurant examination yesterday. There is a saying, “Better to be lucky than good.” Our office probably fits that paradym when it comes to food service restaurants and audits with the Internal Revenue Service. Since 1995, when we started our practice, we have never had a change to a restaurant tax return as a result of an IRS examination. And we have represented many. We don’t know what to make of that, as we certainly can’t say that of the Commonwealth of MA and meals tax, but then again, the Commonwealth works in the land of “make believe” and the IRS understands small business a lot better.
Having said that, the IRS could use some work in finalizing examinations. I am every bit as much interested in a closing conference on an examination with no changes, as I am in a closing conference for an examination with changes. And as an aside, the IRS is pathetically poor in closing conferences for examinations with changes also – they simply don’t conduct them…and they are supposed to.
Why? Because no taxpayer is perfect, even after a “no change” audit. Even an examination with no changes could use some guidance as to how they could do something better. What did they do right? What did they do wrong? The IRS may have done something I think was inappropriate and I would like to discuss it informally, and vice versa, frankly. But they do not.
“No change,” the words of which are music to my ears, therefore must not come without a soreness on the side of the IRS. And why should that be? If there is a change, I get a “courtesy” call before the letter (albeit never a conference). But if there is no change, we won’t know a thing until we open the envelope. Why is that? Is it because the IRS feels as though they lost? I hope that isn’t the case, because audits are supposed to be objective. No one “wins” or “loses.” Sure the client is happy, because the tax return is deemed to have been reviewed and accepted as filed. That is all it means. It’s a satisfactory conclusion for us, but by no means a “victory.”
Anyways, “congratulations” to a very dear friend and client of our office. And Happy Thanksgiving to everyone!