How To Find Tax Audit Representation

There are many reasons that the IRS would select your return for an audit. Not all audits are attempts to find wrongdoing. Sometimes, a return is simply chosen at random or because the IRS has additional questions about the information you provided.

If the IRS chooses to audit your return, you have the option of representing yourself during the audit. You also have the right to bring in someone else to represent you who specializes in tax resolution.

In this article, consider your options during the audit with the following information:

• Who can represent taxpayers in an audit?
• What happens in a tax audit?
• What rights does a taxpayer have?
• Finding tax audit help
• How to choose the right tax professional for your audit

Who Can Represent Taxpayers in an Audit?

The IRS has strict rules as to who can practice before the agency. It won't let just anyone represent taxpayers. These rules limit most representation to tax attorneys, certified public accountants (CPAs), and enrolled agents who have either passed a test or are former IRS agents.

This limitation is intended to give you peace of mind. It reassures you’ll have competent representation during an IRS tax audit. A representative usually has power of attorney to act on your behalf, so you want them to be competent and knowledgeable.

This means the audit representative will understand:

• Your rights and the rules in place to protect them
• The rules that the IRS must follow
• The rules that apply to taxpayers and representatives when working with the agency

Many taxpayers are understandably angry about being the subject of an audit. Yet, you should try to choose a representative who will work with the IRS's staff to resolve your tax issue. Actions unnecessarily delaying the collection process usually result in a taxpayer facing additional penalties.

What Happens in a Tax Audit?

Before you seek help for a tax audit, understand the tax audit process and your rights. Basic familiarity should make the audit process go smoother and faster.

All audits start with the IRS sending a notification by certified mail. The notification letter will explain the steps you need to take and provide you with a deadline for a response. The IRS notice will tell you the tax year for which your returns are under examination. It also includes details on the additional information the IRS will need.

IRS audit notices are often known as "30-day letters" because you have 30 days to respond. It is crucial that you respond to the letter by the deadline to avoid additional IRS actions and penalties. You can usually respond using the phone number listed in the letter, sending a response letter, or having a representative respond on your behalf.

What happens after you respond to the 30-day letter depends on the type of audit the IRS is conducting.

• Correspondence audit: This is when the IRS asks you to mail in additional paperwork, such as a schedule that wasn't included in your return or proof of business expenses you may have claimed.
• In-office audit: This is where you will be asked to bring your tax records to an IRS office for an in-person meeting with an auditor to discuss the information reported on your return.
• Field audit: A field audit occurs when an IRS auditor meets with you at your home or place of business to review your records.

If you have hired IRS audit representation, they can respond to correspondence or accompany you to meetings. If you are the subject of a field audit, you can ask the IRS auditor to meet with you at your representative's office.

Possible Audit Outcomes

While there are a variety of reasons the IRS will initiate an audit, there are only three possible audit results, including:

• The IRS can accept your explanation and your supporting documents, making no changes to your federal tax return.
• The IRS can propose to make changes to your tax return and you can accept the changes by signing a document. Since accepting the changes usually means admitting you owe back taxes, you will probably have to make arrangements to pay your tax debt.
• You can refuse to accept the additional taxes proposed by the IRS and challenge the assessment by either appealing through the IRS's Independent Office of Appeals or asking a tax court to decide the matter.

If the IRS makes no changes to your return or you accept the IRS's proposed change to your tax liability, your audit will be finished. You will have no further need for representation on the matter. 

If you disagree with the IRS's proposed changes and have yet to hire someone to represent you, it is generally a good idea to find a representative before you continue challenging your tax bill. In addition to helping you work with the IRS, a representative will usually provide a realistic assessment of your chances of succeeding in your appeal.

What Rights Does a Taxpayer Have?

The U.S. Tax Code provides the following taxpayer rights during an audit:

• Representation by oneself or an authorized representative
• Professional and courteous treatment by IRS employees
• Privacy and confidentiality about tax matters and financial records
• Knowing why the IRS is asking for information, how the IRS will use it, and what will happen if the requested information is not provided

Getting legal advice can help you understand your rights and whether the IRS or someone else has violated them.

Finding Tax Audit Help

Once you know the issues the IRS wants to address in the audit and the type of audit being conducted, you need to carefully determine whether you need self-help tools, tax audit assistance, or full representation for your audit.

Self-Help Tools

If resolving your audit issues seems simple, you can use online or self-help tools. The IRS publishes articles and guides that explain specific tax issues and numerous other free online guides are available. Those guides should provide answers to basic questions you may have.

If the IRS is simply asking you for additional documentation for accuracy, you probably won't need to hire a representative. You can gather the necessary documentation yourself. Your audit should end when you provide the IRS with the correct records.

Tax Audit Representation

If you discover that the IRS is conducting the audit because it believes you made a serious mistake, you may be facing a larger tax bill, a tax penalty, and interest payments. In those situations, hiring a representative who provides tax services is generally a good idea. 

If you are facing accusations of having committed the crimes of tax fraud or tax evasion, you should hire a tax lawyer, who will negotiate on your behalf with the IRS and represent you in any legal proceedings which come out of the audit. They will also research any issues related to your audit, and communicate with the IRS tax agent to resolve the problem.

How To Choose the Right Tax Professional for Your Audit

There are many resources and companies offering tax audit help, but you need to make sure you choose the right one for your tax problem. Check that the service you choose will help you get the desired result.

Here's a basic list of what you should look for:

• The tax professional must be allowed to practice before the IRS.
• The tax professional should be able to tell you what to expect and how to prepare for the audit.
• The tax professional should help you understand tax law.
• The tax professional's office should be conveniently located for tax audit representation.
• You should feel comfortable telling the tax professional your personal information.
• If you own a small business or are self-employed, the tax professional should have experience with the tax situations of business owners.

Many tax preparers include audit defense in their service packages in case the IRS selects your return for a closer look. It can be helpful to work with someone familiar with your situation already.

Yet, the audit service you choose doesn’t need to be the same person who helped with your tax preparation. An audit doesn’t always mean your return was prepared poorly, but you may want a second opinion. Some kinds of tax preparers might lack the financial and legal skills for complex audit scenarios.

Need More Help? Talk to a Tax Lawyer

If you receive an audit letter, contacting a local tax lawyer for help with audit defense is often a good idea.

Whether you are facing an audit of your individual return or of your small business, a tax attorney can help you determine why you are being audited and how you should respond. A legal professional will also provide you with representation if you want to appeal the results of the audit and ensure that your rights are protected.