IRS Audit Representation
First, we want you to take a deep breath and relax.
No one likes being audited and receiving an IRS audit letter in the mail can be a scary proposition. However, what many people fail to realize is that an IRS audit letter does not mean that you have done anything wrong. What is does mean, however, is that the IRS plans to review a few line items on your return to make sure they were reported properly and may question the validity of your stated income and expenses.
IRS Audits Are Costly and Time Consuming
Make no mistake though: IRS audits are costly and time consuming, particularly if the revenue agent on the case gets carried away in their document requests. However, swift action and foresight can significantly reduce the aggravation caused by an IRS audit. Keep in mind that unless you have done something seriously wrong or do not have the proper substantiation for claimed income/expense categories, you usually do not have much to worry about with proper representation.
Professional Representation Advantage
Although we do encourage clients to try and handle their tax problems themselves prior to resorting to professional representation, we do feel audits are one of the few areas where a taxpayer can gain a significant advantage by having professional representation handle the audit.
- IRS revenue agents, though many are nice people, have a tendency to get tough on taxpayers because they know they have a better knowledge of tax procedure than the taxpayer.
- A skilled representative can neutralize that advantage or even turn the tables on a revenue agent that may not be familiar with certain sections of the tax code.
- Having representation present at the audit, rather than the taxpayer, prevents the taxpayer from being cross examined by the revenue agent during the course of an audit.
- A primary goal for most audits is to try and limit the flow of information and it is extremely difficult for a taxpayer to avoid direct questioning.
- Keep in mind that false statements to an IRS revenue agent are a serious offense. Taxpayers may get nervous and overstate their position or provide other false information.
- Audits are examinations of the taxpayer and their personal financial situations. There may be sensitive information that you do not want shared with the auditor or may be emotional during the course of the audit.
A skilled representative helps take the emotion out of the process and can establish a better working relationship with the auditor because things are less personal. Most IRS revenue agents that we know prefer working with representatives because of this.
You Have Done Nothing Wrong
Hiring professional representation does not signal to the auditor that you have done anything wrong. Quite the contrary, it shows that you know:
- An audit is serious
- A representative can minimize work on the part of the revenue agents
- It will lead to a better outcome
In short, at the very least we would suggest that you consult with a skilled representative prior to making the decision to handle the audit by yourself.
Initial consultations can help you glean a lot of information about the audit process by going through the return. In addition, we have posted information on this website about IRS audit strategy and the IRS audit process that is designed to answer some of the initial questions that you may have.
However, audits are usually very fact specific, and so we would encourage you to contact me directly with any question.
IMPORTANT: If you have been selected for an IRS audit and any one of the following factors apply to you, please contact me for immediate assistance or visit our criminal tax defense page for further information.
- You feel that you may be the target of an IRS criminal investigation or have some reason to suspect the involvement of the IRS Criminal Investigation Division
- You know the information contained on your return for the year subject to audit or information on your tax return (within six years of the return under examination) contained false or misleading information.
- You have understated your income on your tax return or did not report cash transactions that you engaged in.
- The deductions on your return have been overstated or are fictitious.
- You have noticed that the person who prepared your return made an error in the preparation or you believe that person may be the target of a criminal investigation.
- You are a business that pays workers in cash without making proper payroll tax withholdings or you have underreported your state payroll tax or state payroll tax liability.