Tax Audit Support
Assistance during IRS or state audits with document preparation, response drafting, and guidance through the audit process.
What Happens
You get a letter from the IRS or the California Franchise Tax Board. They want to examine a prior year return. Maybe they are questioning specific deductions. Maybe they selected you at random. Either way, you now have a deadline to respond and a list of documents they want to see.
For contractors and trades businesses, this is where things get difficult. The records might be scattered. Job cost documentation might be incomplete. Vehicle logs might not exist. The audit letter asks for specific categories of proof, and you are not sure what qualifies or how far back you need to go.
The Letter
The Letter
An audit notice tells you what they are looking at and what they need from you. It is not a bill. It is not a penalty. It is a request to verify what you reported. But how you respond to that request matters enormously. A disorganized or incomplete response invites more questions.
The Records
The Records
The IRS wants receipts, bank statements, invoices, contracts, mileage logs, and anything that supports what you claimed. For a plumber who deducted $40,000 in materials and $15,000 in truck expenses, they want to see the paper trail. If it does not exist, the deduction gets denied.
Why Trades Get Targeted
Cash-heavy businesses with lots of expenses attract attention. Construction companies, electricians, landscapers, and cleaning services all share a common profile. High material costs. Vehicle and equipment deductions. Subcontractor payments. The IRS knows these industries have a higher rate of underreported income and overstated deductions, so they look harder.
California adds another layer. The FTB and the EDD both audit aggressively, especially around worker classification. If you paid subcontractors and the state thinks they should have been employees, you are looking at back taxes, penalties, and interest. Walking into that conversation unprepared is a real problem.
Subcontractor Risk
Subcontractor Risk
If you paid someone as a 1099 subcontractor and cannot show a signed contract, proof they control their own schedule, or that they carry their own insurance, the state may reclassify them as W-2 employees. That means payroll taxes you never withheld are now owed with penalties on top.
Expense Red Flags
Expense Red Flags
Large deductions for vehicle use, tools, and materials are common in the trades. They are also common targets for auditors. If you claimed 100% business use on a truck with no mileage log, or deducted $60,000 in supplies with no receipts, expect those to be the first things questioned.
How We Help
We go through everything before you respond. We review the notice, figure out exactly what the auditor is asking for, and help you gather and organize the supporting documentation. If records are missing, we work with what is available to build the strongest response possible. Every document gets reviewed and organized so nothing is handed over that creates a new problem.
You do not have to figure this out alone or sit across from an auditor wondering if you are saying the right thing. We prepare the written responses, handle the back and forth, and guide you through each step. The goal is to resolve the audit with the least amount of additional tax and penalties by presenting your case clearly and completely.
Document Preparation
Document Preparation
We organize your records into the exact format the auditor needs to see. Bank statements matched to expenses. Receipts tied to specific deductions. Contracts and 1099s organized by vendor. A clean, well-prepared package signals that you take your records seriously.
Response and Guidance
Response and Guidance
We draft every written response. If the auditor asks follow-up questions, we handle those too. You are not guessing at what to say or accidentally volunteering information that opens a new line of inquiry. We keep the scope as narrow as possible and work toward getting it closed.
Long Beach's CPA for Contractors and Trades
The Next Step:
A Quick Conversation
Tell us about your business and where you need help. We'll ask a few questions, let you know what we can do, and give you a quick quote.