Facing an IRS Audit?

 Posted on January 30, 2024 in Audit

The mere mention of an IRS audit is enough to send shivers down the spine of any taxpayer. However, with the right approach and expert guidance from a skilled tax attorney, this daunting process can be managed successfully. This post aims to demystify the IRS audit process and outline the strategic role a tax attorney plays in defending your interests.

Understanding IRS Audits

An IRS audit is a review of an individual's or organization's accounts and financial information to ensure information is reported accurately according to tax laws. Audits can be triggered by discrepancies in your tax return, random selection, or excessive deductions relative to your income. They come in three forms: Correspondence Audits (conducted by mail for minor issues), Office Audits (more in-depth, requiring a visit to an IRS office), and Field Audits (the most comprehensive, conducted at your place of business or home).

Initial Steps Upon Receiving an Audit Notice

First and foremost, don't panic. Read the notice carefully to understand what the IRS is questioning. Begin gathering all relevant financial documents, like receipts, bills, and income statements. It's crucial to understand your rights, including the right to representation and to question the IRS's findings.

Role of a Tax Attorney

A tax attorney is your frontline defense against the IRS. Unlike CPAs, who are experts in preparing and filing taxes, tax attorneys specialize in the legal and procedural aspects of tax issues. They can wade through the complex web of tax laws and use their expertise to your best advantage during an audit.

Preparing for the Audit: A Tax Attorney’s Strategy

Document Collection and Review: Your attorney will help you gather and organize all necessary documents. They will review these for completeness and accuracy, helping to reconstruct any missing information.

Understanding Your Financial History: The attorney will discuss your financial background with you to understand and prepare explanations for any discrepancies the IRS may question.

Legal Research and Precedents: The attorney will research relevant tax laws and past audit outcomes to form a robust defense strategy.

Pre-Audit Meetings and Correspondence: Your attorney will communicate with the IRS on your behalf, forming a wall between you and the agency. The attorney will address preliminary agent concerns, confine the scope of the inquiry as much as possible, and attempt to minimize any potential consequences.

During the Audit

Your attorney will either accompany you to meetings or handle them on your behalf. They will present your case, backed by documentation and legal arguments, and respond to IRS inquiries, ensuring your rights are protected throughout the process.

Post-Audit: Outcomes and Next Steps

Post-audit, your attorney will help you understand the results. If unfavorable, they'll guide you through the appeals process or tax court, as warranted. If you owe additional taxes, they can help negotiate a payment plan.

Preventive Measures for the Future

To avoid future audits, maintain meticulous financial records and engage in proactive tax planning. Regular consultations with your tax attorney can help keep your tax affairs in order and compliant with the law.

Facing an IRS audit can be intimidating, but with a tax attorney's guidance, it becomes a manageable process. Their expertise is invaluable in protecting your financial interests and ensuring a fair audit process.

If you're facing an IRS audit or want to prepare for the possibility, contact our office today for a consultation. Our experienced tax attorneys are ready to defend and guide you through every step of the process.

"Thanks to Arnold Visha for his immeasurable contributions to this post”