Tax audit representation, also called audit defense, is a service in which a tax or legal professional stands in on behalf of a taxpayer (an individual or legal entity) during an Internal Revenue Service (IRS) or state income tax audit. An audit representative develops the strategy used to defend the taxpayer’s position. He or she assists the taxpayer in preparing all documents requested by the taxing authority and typically attends all meetings and handles correspondence on behalf of the taxpayer. The types of representatives who are allowed to represent taxpayers before the IRS in income tax audits include enrolled agents, CPAs, and attorneys.
Dealing with the IRS or the State audit letters can feel like an unmanageable ordeal. The letters are hard to understand and nerve racking. Audits are high maintenance and high demanding tasks because the IRS requires that you gather all records and paperwork associated with your tax returns in order to substantiate what you have signed off to on your tax return. Dealing with the IRS under audit circumstance subjects you to a high level of scrutiny that can feel like a violation of one’s privacy.
Selection of a tax return for an IRS audit does not necessarily mean there is something wrong. Sometimes tax returns are selected for an IRS audit on the basis of a statistical formula developed by the IRS. The IRS compares your tax return against “norms” for similar tax returns. The “norms” are developed from prior IRS audits of a statistically valid random sample of returns, as part of the National Research Program the IRS conducts.
Other times, the IRS may select your return for an IRS audit because of your connection with other taxpayers who have been subjected to an IRS audit. These taxpayers include your fellow stockholders of your corporation, partners of your partnership, your vendors or customers, etc.
Generally, amending your tax return does not trigger and an IRS audit of your original return. It is possible that your amended return may be screened and selected for an IRS audit. Therefore, have a reasonable basis for amending your tax return, provide reason for the amendment, and enclose applicable supporting documents, to avoid an IRS audit.
Once your return is selected for an IRS audit, you are initially contacted only by mail. The IRS audit letter will request particular documents the IRS auditor wants to examine, and you will be given the auditor’s contact information for a timely response. You will have an opportunity to decide who will represent you before the IRS.
For business tax payers and consumer taxpayers alike, receiving notice for an audit can be incredibly frightening. Instead of going through the stressful process of an audit alone, seek audit representation from the experienced professionals at Sibley & Associates.
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