IRS Audit Representation and Tax Settlements
Perhaps the most upsetting mail an individual or business owner can receive is an audit notice from the Internal Revenue Service, or similar letter from a state auditor. The IRS, as a matter of practice, flags a certain number of returns each year for audit. The reasons triggering audit may change, but certain answers on a return—from unusually high gifting to exemptions that may on the surface appear to be excessive—can trigger an audit.
Businesses too, may be subject to the risk of audit based upon manner of which certain revenue, compensation and deduction decisions are presented on the return. While there may be legitimate reasons for preparing a return that appears suspicious to the IRS, if an audit notice is issued, it is time to contact professionals to represent your interests. Our CPAs have experience in dealing with IRS staff and understand the delicate balance between delivering the answers to questions that are raised without providing too much information that could trigger further examination. The auditor’s job is to investigate. Sometimes, probing questions are asked beyond the scope of the audit merely to observe the response. A taxpayer without representation may inadvertently offer potentially harmful information in answering these questions, leading to an expansion of the auditor’s examination. Poorly answered or undocumented answers may also lead to undesirable and often expensive outcomes. Above everything, ignoring notices is never a smart solution. The Government will not be ignored, but they will assess more charges for penalties and interest.
If you receive an audit notice for your personal or business return, let us help you. Contact our CPA immediately for a consultation.
What are IRS audit representation services?
IRS audit representation is a service in which a qualified CPA stands on behalf of a taxpayer before the IRS, assisting the taxpayers with the compilation of requested documents, correspondence, IRS meetings and provide the assistance necessary during the IRS audit. According to the Bill of Rights, taxpayers have the right to retain an authorized representative of their choice to represent them in their dealing with the IRS. The representative of your choice will help you understand the audit process, answer any questions you may have, and ensure that your rights are protected throughout the process. They can also provide advice on how to best approach the audit and strategies for dealing with difficult issues.
Having professional representation during an audit is highly recommended, even if you feel confident in your ability to handle the process. An experienced tax attorney or certified public accountant can help navigate the complexities of the audit and ensure that your best interests are being represented.
Who can represent you in an IRS audit?
Taxpayers have the right to represent themselves during an IRS audit, but many choose to hire a tax professional or attorney to assist them. The following individuals are authorized to represent taxpayers during an IRS Audit:
- Enrolled Agents (EAs): EAs are tax professionals who are licensed by the IRS to represent taxpayers in all matters, including audits, appeals, and collections. They must pass a rigorous three-part examination and complete ongoing education requirements.
- Certified Public Accountants (CPAs): CPAs are licensed by state boards of accountancy and can provide a range of accounting and tax services, including representation during an IRS audit, representing taxpayers in tax court and negotiating settlements with IRS.
- Attorneys: Attorneys who are licensed to practice law in their state can represent taxpayers during an IRS audit. They can provide legal advice, represent taxpayers in court, and negotiate settlements with the IRS.
It is important to note that not all tax professionals are authorized to represent taxpayers in front of the IRS. For example, tax preparers who are not CPAs or enrolled agents or tax attorney can only represent taxpayers in limited circumstances, such as preparing and filing taxes.
Benefits of IRS Tax Audit Representation Services
IRS tax audit representation services provide individuals and businesses with many benefits. These services can help to ensure that your rights are protected during an audit, that you are not paying more than you owe, and that your best interests are represented. Some of the benefits of IRS tax audit representation services include:
- Professional expertise: Tax audit representation services are provided by professionals with expertise in tax laws and regulations. These professionals understand the audit process and know how to navigate it effectively.
- Time-saving: IRS audits can be time-consuming, and having a professional represent you can help to save time. A representative can handle much of the paperwork and communication with the IRS, allowing you to focus on other important tasks.
- Stress reduction: Audits can be stressful and overwhelming, and having a professional represent you can help to reduce that stress. Your representative can handle communication with the IRS, leaving you with peace of mind.
How to choose an IRS tax audit representation service provider
Choosing the right IRS tax audit representation service is crucial to a successful outcome. When choosing a representation service, there are several factors to consider, including:
- Experience: Look for a representation service with experience in tax law and audit representation. Ask for references and check their credentials.
- Cost: Representation services can be expensive, so it’s important to understand the costs upfront. Ask about fees and billing practices.
- Communication: Choose a representative who communicates well and is responsive to your needs. You want someone who will keep you informed throughout the audit process.