There’s no worse news than being told that the IRS is auditing you. Your first instinct might be to panic. Once you catch your breath, the next step is to begin making arrangements to give the IRS the information they need to conduct the audit.
Instead of facing an audit alone, it’s often a wise move to have representation in the form of an IRS audit attorney.
Let’s back up for a moment. There are three types of audits you may face, and they all have different implications:
1.Correspondence Audit – As the name suggests, a correspondence audit is done in writing, usually via email. You might be subject to a correspondence audit if minor discrepancies in your tax return need to be addressed.
2. Office Audit – An office audit occurs at an IRS office. This can be intimidating because the audit is conducted in person. You’ll receive an invitation that tells you the date and time to be there. Fortunately, you can bring your attorney with you.
3. Field Audit – The most intimidating type of audit is a field audit. These audits can be done in your home, business, or your attorney’s office.
If you’ve been assigned a field audit and you feel uncomfortable having an IRS agent at your home or business, you could potentially request an office audit. However, that might raise red flags and show you’re hiding something. Your attorney can go through the pros and cons of a field versus an office audit and advise you accordingly.
Benefits of Hiring an Attorney for an IRS Audit
There are a lot of reasons why you might want to have legal representation on your side during an audit. We’ll discuss four of the most compelling benefits.
It’s natural to want to get an audit out of the way as quickly as possible. And while it’s important to cooperate with the IRS and give them information in a timely manner, it’s also vital that you provide them with accurate information. You may also need to file new or amended returns as part of the audit process.
Errors are easy to make, especially if you feel pressure and stress. An IRS audit attorney can file your returns and submit any other required documentation.
2.Benefit from an Attorney’s Knowledge of Tax Law
Keeping up with the IRS tax code is a full-time job. There are more than 1,700 pages in the tax code, and even if you had all the time in the world, it’s unlikely that you’d read the entire document cover to cover and understand all the nuances.
Instead of walking into an audit hoping for the best and expecting the worst, an IRS audit attorney will be equipped to go toe-to-toe with the auditor. Attorneys in this field make it a point to stay up to date on the current tax code, and they’ll understand how it can be applied most favorably to your tax situation.
3.Get Protection from Unscrupulous IRS Agents
In every professional encounter, there’s a chance that you’ll come face-to-face with someone who is dishonest or behaves inappropriately. When it comes to a tax audit, you could end up with an auditor who tries to intimidate you, threaten you, or lie.
These types of actions violate your rights, but if you don’t have an attorney by your side, it can be hard to recognize inappropriate behavior and take action to defend yourself.
4.Increase Your Chances of a Favorable Outcome
You could have a balance due to the IRS that includes back taxes as well as penalties and interest. You could even be facing criminal charges. Here, having an advocate who’s looking out for your best interests can make a dramatic difference in the outcome of an audit.
In addition to potentially reducing your tax bill through negotiation, legal counsel could also work to set up reasonable installment agreements. In some cases, your attorney could get your debt classified as CNC, which is short for Currently Not Collectible.
Keep in mind that CNC status doesn’t mean your debt is forgiven, but you could be granted a grace period before you have to begin paying down your debt.
How a Tax Attorney is Different than an Accountant
Though you might work with a CPA (certified public accountant) to prepare your taxes, you’ll need different expertise than you can get from the average tax accountant if you’re facing an audit.
A tax attorney has the combined knowledge of current tax law as well as the ability to defend you and potentially negotiate a lower bill.
Contact a Tax Attorney
We understand that receiving an audit notice is stressful, and it can feel like your world is being turned upside down. You don’t have to deal with this on your own, and it costs nothing to contact our office for a free tax analysis.
At Levy & Associates, we have a whole team of tax experts, including attorneys, tax experts, CPAs, and even former IRS revenue officers. We’re here to help. Contact us today to review your next steps.