Who Should You Call First When The ATO Contacts You?

Receiving a letter, email, or text message from the ATO is one of those times when your stomach sinks. Even if you have done all the right things, it is quite understandable that you are nervous and ask yourself: Who do I discuss this with?

Do you call your accountant? Your tax agent? The ATO directly? A lawyer? Or do you simply pretend that it does not exist? (Spoiler: that last one is never a good choice.)

We will go through what to do, who to call first, and how to make a stressful situation manageable by breaking it down into a step-by-step process.

First things first: Don’t panic, get clarity.

Compose yourself and take a breath before you pick up the phone. You need to know what the ATO actually wants.

The following is a simple order to follow:

1. Read the letter carefully.
   Look for what they desire: more information, rectification, payment, or simply a regular inspection.
2. Find the key details.
   Record the date, the reference number, the tax period they are requesting, and any deadlines.
3. Check the type of contact.
   Is it:

• Margaret being reminded of a late lodgement?
• A request for clarification?
• An overview (not as frightening as it may sound)?
• A formal audit notice?
• A payment or debt notice?

1. Gather your documents.
   Gather your tax statements, bills, bank statements, or bookkeeping records that are related to the time period they are discussing.

After identifying the kind of problem you are dealing with, you will be in a better position to know who to contact first.

Who is your support team when it comes to money?

Consider this as a team that supports your finances:

• Bookkeeper: Routine operations, reconciliation, simple records.
• Tax Agent: Tax returns, tax lodgements, tax deductions, communication between you and the ATO.
• Accountant: Organisation, business strategy, business performance, financial statements.
• Tax Attorney (or legal advisor specialist): Legal disputes, fines, fraud cases, intricate legal reasoning.

You may not find all of these folks on your side, but that is all right. What is required is understanding which role will best assist in dealing with the type of ATO contact you have received.

When to call a tax agent first

When the contact with the ATO is obviously concerning your tax returns, deductions, or lodgements, then you generally make your initial call to your tax agent.

Common examples include:

• You have not lodged your return or BAS.
• A demand for further details regarding certain deductions.
• Enquiries on expenditure related to work, claims on rented properties, or returns earned on investments.
• An analysis of the tax return of a specific year.

Your tax agent already knows your returns, your history, and the way your claims were prepared. That is why they are the right individual to decipher the request of the ATO and act in the right way on your behalf.

They can:

• Summarize the letter from the ATO.
• Assist you in assembling supporting materials.
• Write a professional reply to the ATO.
• Request more time in case you need it.
• Avoid compliance errors and minimize penalties where feasible.

As an illustration, when you get an unpleasant audit letter from the ATO, it is easy to lose heart. Seeking the services of a local expert like tax agent Sutherland who understands what you are going through makes the audit process much easier, as you will feel that you are not alone.

If it is obviously a question of a tax return, and you have a tax agent, they are your first port of call.

First things first: When to call your accountant

Alternatively, an ATO contact may be more about what lies beneath the numbers rather than the actual return, especially when you are in business.

Instances in which your accountant is your first line of call would be:

• The ATO is auditing your business earnings or expenses across a number of years.
• There are problems with GST, PAYG, or superannuation which are related to your payroll or bookkeeping.
• The ATO is matching your numbers with industry standards and pointing out anomalies.
• You have been contacted regarding business structure, related party loans, or director obligations.

The actual issue, in such situations, may not be in the tax return as such, but in the manner your financial statements and records are prepared.

An accountant can:

• Examine your financial statement and the way amounts were transferred to your returns.
• Determine whether this is a compliance problem, reporting mistake, or simply a misconception.
• Get your bookkeeper and tax agent (if they are different people) to correct the cause of the problem.
• Assist you in installing improved systems to avoid future problems.

In case you are already closely associated with the public accountants who prepare your financial statements and aid in handling your business figures, these people can be the best first-hand contact to help figure out what the ATO may be noticing.

After you have the financial picture straight, your accountant and your tax agent can collaborate on the ATO response.

When you could call the ATO directly

There will be occasions when it is quite rational and even productive to speak to the ATO.

Good examples include:

• Easy explanation: You do not know what a certain sentence in the letter means.
• Checking legitimacy: You would like to verify the authenticity of the letter, email, or SMS to ensure it is not a hoax.
• Short extension: You simply require some extra time to file a return or pay a small bill.
• Modifying information: You have not updated your contact information, bank account, or address.

In case you are sure that the matter is simple and you know where you stand, a swift phone call to the general enquiries line of the ATO can resolve the confusion.

However, do not go it alone unless you are sure you are on the right track. Do not call them alone if:

• You do not know what the ATO actually wants.
• The letter is referring to fines, an audit, or severe non-compliance.
• It is associated with several years or high dollar values.
• You fear that you might have made significant errors.

In such cases, seek professional advice first and then allow them to speak to the ATO on your behalf.

Preparation before making the call

In order to get the most out of that initial consultation with any professional, prepare the following:

• A clear picture or PDF of the ATO letter, email, or notification.
• Your tax file number and any ATO reference numbers contained in the letter.
• Simple information about your situation (e.g., business structure, employment, investments).
• Your accounting software or key records during the period under observation.
• A list of your questions or concerns so that you do not leave anything out during the call.

Not only will this save you time, but it could also save you a great deal of money in the event that you are paying someone for their advice.

Don’t delay, call.

The only sure thing that is wrong when the ATO gets in touch with you is to do nothing. Letters unaddressed may cause minor problems to become major and costly issues.

Instead:

• Read the letter calmly.
• Determine who can be most useful.
• Contact that individual early enough and disclose everything.
• Hand over the technical aspects to the professionals so you can make good decisions.

In case you have something in your hands issued by the ATO and you do not know what it is, now is the time to do something about it—not next week, or even after that, when it is too late.