In 2009, the Internal Revenue Service issued the Construction Industry Audit Technique Guide (ATG) for use by IRS agents and for contractors. The contractor’s audit guide explains the processes and methods the IRS uses to examine a contractor. The end goal is to verify actual taxable income over an assigned tax year for a contractor. The IRS recognizes that this industry is complex and utilizes multiple methods to establish revenue and net profits. It is so complex, the guide is 257 pages long.
This article introduces the guide and its major sections and how to understand what areas are applicable to your construction company.