Accounting Articles > Illinois Sales and Use Tax Audit:

What is the audit process like?

Although every Illinois Department of Revenue Audit is a little bit different, they all have common elements.

They send out a letter that does six things:

1. Informs you of the examination
2. Informs you of the returns and years under examination
3. Gives you a date, time and place for the Audit
4. Gives you the Contact Name and Contact Information of The Auditor
5. Provides you with an initial list of documents to gather
6. Informs you of your rights as a Taxpayer
   

The steps you should take:

1. Get representation.
   Your most fundamental right as a taxpayer is the right to representation. You don't have to do this alone, and you don't need to keep bad representation either. If you are in the middle of an examination and your Accountant is doing a bad job, you may retain different counsel.
   
   If you choose to have representation for your audit, you will be required to sign a Power of Attorney form. This authorizes a representative speak on your behalf. The Department of Revenue Representative cannot speak to anyone but yourself or your authorized representative about your tax matters.
2. Choose a place for the Audit to occur.
   Generally, business audits are performed at either the place of business or the accountant's office. We suggest that they be held at our offices in order to avoid interrupting the flow of your business or alarming your employees. Also, distance from the situation will make you less likely to get nervous and say the wrong thing. Even the most seasoned entrepreneur, with nerves of steel and without any reason to be afraid, can have a meltdown.
3. Gather the documents requested.
   The key word is document. Telling them that you didn't purchase any equipment from out of state for use in the business, and therefore weren't required to pay use tax, is useless. Presenting an electronic copy of Quickbooks and verbally verifying its accuracy is also useless. They only want to see source documentation which is by definition evidential and untainted. If you don't have these items, such as copies of bank statements, canceled checks, invoices and receipts, you may be in trouble, which is why record keeping is so important.
4. Always be courteous and nice.
   Being either rude or mean to any representative of any taxation agency will never help you and will generally hurt. This is one of the main reasons that you should have representation during an Audit. Auditors will generally treat a CPA or Enrolled Agent professionally, but Clients can emotionally complicate this dynamic. Remember, always be nice, no matter what is happening.
5. The on-site visit.
   The Agent is required to do this. While at your location, they will ask you some questions. Generally, these questions will be provided to us prior to the visit. Remember, be nice. Any hostility can be misinterpreted. You’re just a hard-working, tax-paying American trying to help the government do a difficult job.
6. The end result.
   If we get a no-findings letter, it means that no changes have been made to the audited returns, and that you don't owe any additional tax, interest or penalty. Anything resulting in an additional tax can be challenged or appealed.