A client of mine is going through their first IRS audit in over a decade. There’s nothing to be alarmed about from their side. It just happens to be an audit that comes up every so often, rather than being triggered by a specific event.

What was interesting was the comment that came from the IRS agent at the start of the audit. It’s a good lesson to remember to help keep things in perspective. The comment was, "Little piggies get to go back to the trough to eat. Big piggies get slaughtered."

That’s a good thing to keep in mind when determining how aggressive you want to be on tax matters. It’s not all black and white as you might think. There are areas of interpretation. That’s not to say that there aren’t some. There are some black and white areas that aren’t necessarily subject to negotiation.

So, think about what you’re doing on the particular tax side. Would you be considered to use the IRS agent’s terminology of little piggy or are you a hog that risks being taken to the slaughterhouse when the IRS happens to come in?

If you’re the latter, is it a risk you can really afford to take? I don’t think so. Eventually, that catches up. Often times, that behavior in this part of your business will spill over into other areas.

I suggest adopting a strategy of being able to live for the long haul. Nibble where you can, be aggressive where prudent on your tax policy, but don’t cross the line. Don’t turn from being a little piggy into being a hog. Someone once said, "If you keep betting the farm, sooner or later you’re going to lose the farm." Don’t be a hog that will get slaughtered someday. That time always comes and usually you don’t know when.

Jon Paul, MBA, CPA, CMC, CM&AA

President, Value Added Finance Resources
Bringing new insights on results and maximizing company value