There is no word dirtier in the tax vocabulary than a tax audit. Practically every taxpayer is afraid of one, even if they take the proper steps in preparation and filing.
An audit is a stressful experience but it does not mean that you are guilty of anything. It can simply mean the IRS needs a little more information to prove the numbers reported are correct. So the first step is not to panic.
However, if you still feel concerned about the tax audit you may want to consider an audit defense team.
What is an audit defense team?
While this may sound like a term you would hear in a commercial on TV from a lawyer wearing a thousand-dollar suit, it’s actually a service you do not receive from a law firm.
An audit defense is represented through a tax professional. In many circumstances it only involves one tax expert, though a team is created on larger cases involving a business or organization undergoing a complicated audit.
A defense team is well seasoned in tax law and audits. The team can assist with a number of important functions:
- Review the tax return in question with you.
- Help gather important documents to prove your case.
- Provide reasonable explanations for the IRS when documentation to prove the case is not available.
- Serve as a direct line of communication with the IRS, so you do not feel pressured to deal with the IRS personally.
- Develop a strategy to appeal the case if the audit is not returned in your favor.
- Negotiate with the IRS or State through Appeals and pre-litigation Appeals review prior to a trial in Tax Court.
Steps to Pursue an Audit Defense
The IRS has up to three years to audit a tax return. If you or your business is being audited they will send a written notice to regarding the circumstances. The written notice will include information on what is being challenged by the IRS and how you can assist in the matter. Since the audit can go back as many as three years, the hope is that you have carefully saved and organized previous documents related to the return, however, that is not always the case. Ideally you have saved:
- The tax return(s) in question
- Applicable financial statements
- Financial records
- Check register
These are but a few examples of important personal documentation and finances that you may need. If by now you are beginning to feel overwhelmed dealing with the preparation for an audit, the next step is to contact a tax professional about an audit defense.
The Audit Defense Handles Communication with the IRS
The IRS is an intimidating foe. After the initial notice of an audit is sent out, they will want to establish an examination either by mail or in-person. Mail audits are the most common, and usually the least severe. It is plausible to handle a mail audit without a defense team, though still a decent idea to at least pursue them as many offer a free consultation.
In-person audits are cause for a little more alarm. The IRS usually only wants to meet with individuals if they deem the case serious enough, so in these instances having an audit defense is very wise.
The audit defense can handle all the communication with the IRS, which takes a huge burden and amount of pressure off your own shoulders. Whether the in-person meeting is conducted at an IRS office location, or your home or place of business, the audit defense speaks the jargon and lingo of taxes and will be on hand to ensure everything is done fairly.
They are experts in this field and can quickly get more familiar with a return in question in a short amount of time, know what documentation to present, what explanations to provide, and actively communicate with the IRS throughout the entire process.
Do I need an audit defense team?
The IRS can audit you for a number of reasons. Regardless of the circumstances, audits are troubling. The complex process often requires representation on your part not only because you lack the expertise but also because you deserve it. The IRS can get a distinct advantage by going after you directly, and alone, isolating you into feeling like you are guilty when you have done nothing wrong.
A strong tax audit defense strategy can be the difference between favorable and unfavorable results. So if you can’t afford to lose an audit, than hiring a tax professional can help streamline the tax audit and make it easier for all parties involved. It will guarantee fair treatment. If you need an audit defense team or help preparing your taxes so you can avoid an audit altogether, contact Levy & Associates to learn more about how we can help you.