IRS Tax Audit Manual for the Drywaller’s Industry
ATTENTION DRYWALLERS – Don’t get backed up against the wall during an audit with the Internal Revenue Service!
Can your tax returns slide through IRS computers and past IRS scrutiny? It’s possible, but what happens if your return is flagged and you become a statistic? We have the tools you need to be ABSOLUTELY prepared if, and when, it does happen to you! The more familiar you are, the more you can be on the alert to assess the direction of the audit and work successfully with your tax professional.
Take a peek at the IRS Tax Audit Manual for the Drywaller’s Industry written specifically for Internal Revenue Service Audit Agents to use while conducting audits of Drywallers.
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From Chapter 2 – What the Internal Revenue Service tells its auditors about Drywallers:
“Their background as skilled craftsmen gives Drywallers inherent strengths and weaknesses in running a business. Their experience in doing the work themselves gives them an understanding of the labor component of jobs and allows them to organize a workforce to fulfill a contract at the agreed price or lower. For experienced Drywallers, bidding small jobs is second nature. They can eyeball the work to be done, mentally compute the industry standard of 50 cents per square foot for hanging, taping, and texturing, include a premium for an extraordinary circumstances, and arrive at an accurate bid.
Because materials must be pre-ordered for jobs, Drywallers are very aware of cash flow. On larger jobs, normal billing terms are 35% at time of stocking, 35% once hanging is completed, and 30% upon completion. Such terms force Drywallers to match cash outflows with their inflows. In some states, cash inflows are restricted by laws, which limit advance payments to the lesser of 10% of the contract price of $1,000. In addition, since Drywallers do not usually rely on outside financing, maintaining positive cash flow is imperative.”
Is This The Right Manual For Me?
The IRS Tax Audit Manual for Drywallers addresses these tradesmen in their usual capacity of doing work as subcontractors and explains construction audit techniques in this capacity. Items that pertain to Drywallers, such as employment tax issues, and the cash to accrual accounting change issue. Some aspects of this guide will apply to other trades in the construction industry.
In just 2 hours, you will know everything the IRS Auditor will be looking for during an audit of your business. Hey, this isn’t rocket science here – you just need to know what the auditor knows. We can do that for you…simple as that!
The IRS Also Tells Their Auditors…
“Their awareness of costs enables Drywallers to make profits on jobs. However, this profitability may not be reflected on the books and records. Such books and records often just consist of a check register and file even for Drywallers with millions of dollars in gross receipts.”
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TABLE OF CONTENTS
- Chapter 1, Introduction
- Purpose 1-1
- Overview 1-1
- Chapter 2, Industry Background
- Industry Practices 2-1
- Industry Participants and Considerations 2-2
- Chapter 3, Industry Issues and Audit Techniques
- Preplan and Issue Identification 3-1
- Pre-Audit — In General 3-2
- Pre-Audit — Corporations 3-3
- Pre-Audit — Conclusion 3-3
- Initial Interview 3-4
- Employment Tax 3-5
- Required Filing Checks 3-6
- Reconciliation of Books to Return 3-6
- Examining Source Documents 3-7
- Job Files 3-7
- Contracts with Owners/General Contractors 3-8
- Bids and Estimates 3-9
- Materials and Other Expense Invoices 3-9
- Progress Billing Invoices 3-9
- Correspondence 3-10
- Contracts with Subcontractors 3-10
- Billings from Subcontractors 3-10
- Third Party Contacts 3-10
- Bad Debts 3-11
- Unreported Income 3-11
- Glossary G-1
- Appendix A
- Sample Initial Interview Questionnaire A-1