A Federal Construction and Procurement E-Alert from

Authors: Bruce P. Ely and Christopher R. Grissom

Late Thursday, with little fanfare, the Internal Revenue Service posted to its website its revised Examiners' Audit Technique Guide for the construction industry. The guide is over 150 pages in length, but we commend it to your reading. As Ben Franklin once said, "an ounce of prevention is worth a pound of cure."

The guide covers both small and large construction contractors, and includes discussions on long-term contracts, look-back interest issues, financial accounting as opposed to tax accounting, joint ventures, changes in methods of accounting and square-footage costs for various items - and most interestingly, contains an exhaustive set of questions - some of them troubling - that an IRS agent should ask each contractor under audit. It also includes a helpful summary of federal law and guidance pertaining to construction contractors, at least from the IRS' perspective.