For CPAs: Once Tax Season is Over, Audit Season Begins (We’ve Got You)

For CPAs, the calendar does not slow down after filing deadlines. The work simply changes shape. Tax season is about reporting, audit season is about proof. That shift matters because the agencies reviewing your client’s returns, payroll filings, and sales and use tax reporting are increasingly driven by matching, third-party data, and cross-checks that move faster than most internal accounting processes.

A strong audit posture starts before the first notice arrives, and when a notice does arrive, it helps to have counsel who can step in quickly, manage agency communications, and protect the CPA-client relationship.

The Transition, From Filing to Defense

1. Take a short pause, then run a real debrief

A brief reset is practical, but the bigger value is in debriefing what created friction during filings. Identify which clients had messy source documents, inconsistent books, late POS reports, payroll classification questions, or sales tax reporting gaps. Those are the same clients most likely to receive follow-up letters later.

2. Get organized around “audit-ready” records, not just tax workpapers

Clearing the tax-season clutter helps, but audit readiness is more specific. Clients should be able to produce clean, consistent support that ties returns to primary source records. For California sales and use tax matters, CDTFA expects businesses to retain required records for at least four years, and to retain records covering the audit period until the audit is complete. CDTFA+1

If your client’s systems overwrite POS data or vendor detail before the retention period ends, that becomes an audit problem quickly.

3. Keep learning, but focus on what actually triggers notices

Audit standards evolve, but so do enforcement priorities and reporting rules that generate data trails.

A few areas that have surprised clients and advisors recently:

  • Third-party payment reporting (Form 1099-K): The IRS has issued guidance noting that legislation retroactively reinstated the pre-ARPA 1099-K reporting threshold, so payment settlement entities generally are not required to file Forms 1099-K unless payments exceed $20,000 and the number of transactions exceeds 200. IRS
  • Employee Retention Credit enforcement: The IRS continues to publish information on voluntary disclosure options for improper ERC claims, and ERC documentation and eligibility remain a serious audit and examination issue for many businesses that claimed the credit. IRS+1
  • California sales and use tax reporting details that change mid-year: CDTFA regularly issues Tax Information Bulletins with new sales and use tax rates and other changes that affect compliance. CDTFA+1

Preparing for Audit Season, What CPAs Can Tighten Now

1. Get industry-specific about risk

Restaurants, hospitality, retail, fuel, and other high-volume operations tend to face predictable audit pressure points, cash handling, POS integrity, resale and exemption documentation, and use tax on purchases.

2. Communicate early with clients, before the agency does

Proactive client check-ins should not be generic. Ask targeted questions:

  • Are POS sales, deposits, and reported gross receipts reconciling cleanly each period?
  • Are service charges and mandatory fees being labeled and taxed correctly, and consistently across menus, invoices, and the POS?
  • Are purchases from out-of-state or online vendors being tracked for potential use tax?
  • Are contractor relationships documented and consistently treated across payroll, bookkeeping, and operations?

3. Use technology, but verify the logic

Automation reduces workload, but it does not remove audit exposure if the configuration is wrong. This shows up with district sales tax rates, POS tax settings, delivery platform settings, and procurement systems that do not flag tax-charged versus tax-not-charged purchases.

4. Coordinate your team, and define when legal support enters

When you sense an audit risk profile, or when a notice arrives, clarity of roles prevents missteps. CPAs should not have to quarterback agency communications alone in complex matters. Early involvement of audit counsel can reduce scope creep, prevent inconsistent responses, and keep the process disciplined.

A Partnership Built for CPA Firms

Milikowsky Tax Law works alongside CPA firms because we do not prepare returns. That separation is intentional. It lets you keep the client relationship and the compliance work, while we handle audit defense, agency strategy, and the legal posture when the matter turns contentious.

What we deliver

  • Joint IRS, EDD, and CDTFA audit defense
  • Confidential, precise, reliable support for agency notices, information requests, interviews, and audit exams
  • CPA peer groups and closed-door training focused on what triggers audits and what to do in the first 30 days
  • Tactical insights your team can apply immediately, including documentation standards and response frameworks
  • Tariff and customs compliance support when a client’s exposure crosses into import and sourcing issues

Final Notes

Audit season is manageable when the right pieces are in place: clean records, consistent reporting logic, proactive client communication, and a clear plan for what happens when a notice arrives.

If you have a client facing an IRS, EDD, or CDTFA audit, or you want a second set of eyes on an emerging issue before it becomes a formal exam, Milikowsky Tax Law is available to support you and your client.

Learn more about us, here. Read on for insights for CPAs to minimize audit risk for their clients.