What is an Audit Technique Guide?

As a taxpayer, receiving a letter from the Internal Revenue Service (IRS) announcing an audit is an unpleasant surprise. As you worry about the audit, it can be worthwhile to understand a resource that examiners use to look at your business—an Audit Technique Guide (ATG).

ATGs are designed to assist auditors by familiarizing them with an industry and some of the issues and financial practices common to that industry. ATGs are also useful for business people and others interested in the subject matter and accounting practices of various industries. The content of each ATG is taken from the Internal Revenue Manual.

While it may sound like an ATG is a sit-down guide to help you better understand complicated topics, it is important to remember it is a guide written for an examiner performing a civil or criminal tax audit. There are also resources called Technical Resource Guides (TRGs) that provide some legal background and technical methods to analyze certain types of organizations. In some cases, the IRS is combining ATGs with TRGs to provide one guide called a “Technical Guide (TG).”

There are ATGs and TGS available for exempt organizations as well as industry-specific ATGs available, some of which include:

• Construction: This ATG identifies types of contractors and contracts, joint ventures, interest computations, and methods of accounting.
• Golden Parachute: The Golden Parachutes Payments Guide offers an overview and a deep-dive into these kinds of payments, including the nine-step process for conducting an audit.
• Salary Deduction Limitation: This ATG serves up guidance on techniques for executive compensation along with ideas for understanding and discovering how executive compensation files are maintained.
• Oil and Gas Audit Technique Guide: This resource looks at processes for examination of taxpayers involved in oil and gas.
• Pharmaceuticals Industry Research Credit: This guide offers information to examiners and taxpayers on credits provided for Pharma research projects.

It is important to keep in mind these resources are not definitive legal documents. Guides are current as of their revision date (which could have been decades ago) and always subject to further revision. They are a resource for understanding how the IRS approaches an industry—and possibly your business—during an IRS audit.

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With offices in Cleveland and Chicago, the legal group at Robert J. Fedor, Esq., LLC delivers skilled representation on IRS audits, criminal tax investigations, tax litigation, and offshore tax concerns. Call 440-250-9709 or contact us online today.