Do You Need Professional Representation in an Audit?

As you go through your mail, you come across an envelope with the return address of the Internal Revenue Service (IRS). Your heart drops as you realize that you have been selected for an audit. However, it’s essential to remember that you have taxpayer rights, which include the right to representation. In the Taxpayer Bill of Rights, the ninth right, which is the right to retain representation, states that you have the option to choose a Certified Public Accountant (CPA), Enrolled Agent (EA), or an attorney to act on your behalf when dealing with the IRS. You can schedule interviews, or if they are already in progress, suspend them and reschedule them with your representative.

When it comes to dealing with the IRS, it’s always better to be safe than sorry. That’s why it’s important to consider the complexity of the issue before deciding whether to hire a representative or not. The best way to determine this is by understanding the type of audit being conducted. There are typically three types of IRS audits, and depending on the type, it’s highly recommended to have professional representation or at the very least, seek consultation. Don’t take any chances when it comes to your finances – make sure you have the right support on your side.

TYPES OF IRS AUDITS:

  1. Correspondence –If the IRS has a few questions on a tax return, they may conduct a Correspondence Audit. In such cases, they usually ask for supporting documents to be mailed in. If the issue is simple and you have the required documentation, you may handle it on your own. However, it’s important to keep track of the due dates and use Certified Mail Return Receipt Requested delivery. If you don’t have the necessary documents or if the issue is complex, it’s advisable to consult a professional to determine if you need outside representation.

  2. Desk – If your tax return has enough problems or concerns, you may be assigned to a revenue agent for an audit. In such a case, the agent will ask you to come to their office with all the necessary documentation for an interview. It is advisable to consult with a professional and consider hiring representation, especially if there are any known issues with your return.

  3. Field – If there are any major issues or concerns with your tax return, you may be subjected to a field audit. In this type of audit, you will be assigned to an experienced agent who will inspect your home or business in order to uncover any issues with your return. They will also review your surroundings to determine if you have reported all of your income. It is highly recommended that you hire representation for this type of audit. The audit will then take place at the office of the professional you have hired instead of at your own location.

ADDITIONAL REASONS YOU MAY WANT TO HIRE A PROFESSIONAL TO REPRESENT YOU IN AN AUDIT INCLUDE: 

If you are unable to prepare the necessary documentation for an audit, it may be helpful to hire a professional to assist you with organizing your paperwork and strategizing if you are missing any required items. A professional can also review your return for any deductions that you may have missed.

  1. If you are uncomfortable with the idea of handling the audit yourself, it is recommended to hire professional representation. Once the audit begins, there is no turning back and it can easily expand if not handled correctly. By hiring professional representation, you have a buffer between you and the auditor, allowing someone else to communicate on your behalf. A professional can also offer guidance and help you formulate responses to the auditor’s questions.

  2. If you are unable to treat the auditor with respect and common courtesy, it may be best to consider hiring a professional. Despite your feelings towards being audited, it is essential to remember that auditors are professionals who are simply doing their job. Treating them with respect is the first step in ensuring that the audit goes smoothly.

  3. If you do not want the auditor to visit your home or office, hiring representation can help. The field audit can be rescheduled to take place at your representative’s place of business, limiting the auditor’s access to your location, staff, and customers.

  4. If you are too busy to handle the audit on your own, hiring representation can help minimize interruptions. Your representative will handle all communication, allowing you to focus on your work.

  5. If you want someone who knows your rights and can stand up for you, hiring professional representation is the way to go. They can help you understand your rights and ensure that they are upheld during the audit process.

If you choose to go through the audit process alone, it is important to keep in mind that you have the right to request representation at any point. This can be especially helpful if the auditor begins to ask questions about unrelated issues or if the audit seems to be turning into a lifestyle audit. However, if you want to ensure the best possible outcome, it is highly recommended that you hire a professional with extensive experience in dealing with the IRS. With the right representation, you can be confident that your interests are being protected and that you are taking all the necessary steps to minimize any potential penalties or fines.

At JS&A, we have a dedicated Department of Tax Controversy that handles IRS audits and other related issues. If you need more information about our services or want to schedule a consultation, please call us at 336-517-7506.