Tax Controversy & Resolution: Tax Audit Support
Tax Audit Representation
Tax audit representation is a audit defense service in which a tax and/or legal professional represents a taxpayer (i.e. individual or legal entity) during an IRS or state tax audit. During an income tax audit or examination, the IRS and all state jurisdictions allow a taxpayer to have an authorized representative (CPA, attorney, enrolled agent). The representative must have permission to practice before the IRS or state, and specific credentials are required. See IRS Publication 947, Practice Before the IRS and Power of Attorney.
As an audit representative, AndreTaxCo will develop a strategy to defend your position as a taxpayer facing IRS exam. AndreTaxCo will assist you in preparing all documents requested by the taxing authority and generally attend all meetings and correspondences on your behalf.
What To Do If You Get Audited
In general, most tax audits consist of formal letters or correspondences requesting for additional information in support of your tax returns. Usually you may be asked to mail, fax, or potentially send permitted electronic correspondence with the requested forms substantiating your income or deductions. In other situations, you may receive an invitation to meet with an agent to discuss your tax forms, and in these cases having a seasoned and credential authorized representative tax professional to assist will be to your advantage.
Do Not Ignore the Letter & Confirm Response Timeline
Ignoring the IRS is the last inaction you should take. Instead, confirm the items requested and due date for response as noted within the tax letter request sent, and request for additional time if needed.
While you should write back as soon as possible, you or your audit representative may generally ask for more time to gather the paperwork and forms. A two-week extension is not an unreasonable request of your IRS agent.
You May Need Representation
Often, the letter you receive in the mail is a straightforward IRS request for information (e.g. tax forms or receipts for material items claimed). In those very simple situations, sending in the requested material may be sufficient, and you don’t need to get your CPA or tax lawyer involved.
However, if you can not easily find the information requested or the data is not clearly organized, you may need to contact a tax professional to advise on how to satisfy the IRS request, and quickly resolve the issue. And if you’ve been requested to meet with an agent, it is generally highly advantageous to seek outside consultation from a qualified CPA or tax attorney.
In such instances, you will need to grant power of attorney to your audit representative, such as AndreTaxCo, to quickly address any exam or dispute with the IRS while you can attend to your business as a more valuable use of your time.
Some uninformed taxpayers may contemplate whether bringing in a tax professional, that deals with audit representation, may convey to the agent some form of wrongdoing. However, more often than not, it will instead streamline the process to properly prepare the requested information (excel models, workpapers, forms, narrative memos, etc.) in a easily digestible and accustomed format for the agent. As IRS available resources and staff over the years have been diminished, agents share the same objective to cost-effectively resolve any of the exam items under review. As such, IRS agents will generally prefer to deal with a licensed tax CPA or lawyer to quickly close the tax audit.
Provide Only Items Requested (and nothing more)
A very small percentage of tax audits are purely randomly selected. In general during most tax audits, the IRS has very specific questions on particular tax issues, and will request corresponding forms and support.
Although in a tax audit it may intuitively appear to your favor by openly stating your tax position and answering all of the agent’s questions, it is possible to overshare and create addition tax questions and issues. By inadvertently oversharing your confidential and business information to the IRS, it may create additional items to be reviewed and audited by the IRS. Thus more headache, time, and cost to you and your business.
After all, if the IRS is inquiring the legitimacy of your reported income and deductions, it’s highly probable the agency believes you’re under-reporting your tax liability owed to the IRS or state taxing authority. The audit is your opportunity to convince the examining agent otherwise. As such, having a seasoned tax profession accurately and concisely representing you, will likely be to your advantage.
Negotiate & Appeal
Once the tax audit is concluded, the agent will assess any taxes and penalties you owe. However, in general, the assessment can be appealed. However, the IRS may be willing to negotiate a settlement deal to avoid additional time and cost to both the taxpayer and the government.
But to ensure a negotiated settlement's terms and conditions fairly account for your tax position, utilizing professional audit representation like AndreTax Co will greater improve your probability for reasonable and taxpayer friendly negotiation. A licensed CPA or tax lawyer will often be skilled at positioning your case to make a settlement easier. The IRS’ own CPAs, enrolled agents, and lawyers are generally open to negotiate and will often aim to settle cases to avoid accruing additional costs and the hazards of litigation.
Request Audit Representation from AndreTaxCo
If you have received an IRS or state taxing authority letter notifying you that your return has been selected for an audit, your first course of action should include contacting expert tax consultation. AndreTax Co has extensive experience representing various client tax issues, entities, and jurisdictions at both the business and shareholder level. Even if you believe you have not done anything wrong or are unsure why you were selected for audit, as noted above, it can often be to your detriment to attempt to represent yourself during such tax audits.
AndreTaxCo will provide you the experience and professional expertise to resolve your IRS or state audit on your behalf. By contacting us we will represent your case with the IRS and/or state. It is also important to understand your rights during an audit. Before you allow the IRS or state taxing authority to seize your records and personal and/or business data (e.g. computers, records, documents) or even enter your place of business, consult a professional to understand your rights.
By contacting AndreTaxCo, we can file the necessary documentation to diligently represent you and/or your business upon audit to protect your tax claims. If certain documentation is missing we will help you gather and prepare all the documentary evidence needed to successfully defend your tax audit . As most audits can be addressed by correspondence audits, there isn’t necessarily a need to physically appear. This allows us to handle a U.S. tax case across regardless of your location.