This article explores ways to avoid audit risk in connection with a company’s financial activities, and will describe effective methods for dealing with the Internal Revenue Service when it begins examining financial transactions. As conflicts with the IRS can sometimes be prevented or curtailed through effective communications with the other institutions involved in the tax universe, the article also considers the workings of the IRS, the relationship between the IRS Chief Counsel, the Office of Tax Policy at the Department of the Treasury and various Congressional bodies creating the tax law.