Received an IRS Audit Notice? How a Tax Lawyer Can Guide You
For an American, few phrases inspire instant anxiety quite as effectively as “IRS audit“. The popular notion of an audit is that of an unsmiling, robot-like IRS auditor turning your life or business upside-down, looking for the smallest mistake or underpayment to hang around your neck. Like any stereotype, there is a small kernel of truth to that conception of a tax audit, especially without a tax audit attorney.
They are rarely pleasant and can uncover mistakes that leave you with additional tax liability. However, they are also a process and a fairly routine one at that. Contrary to popular belief, the IRS is not “out to get” taxpayers, and most audits – even ones that result in additional liability – do not land taxpayers in legal hot water.
Still, you should never take an audit lightly. It is a serious business with potentially significant consequences. In most cases, taxpayers benefit from having an experienced tax attorney representing them in dealings with the IRS concerning an audit.
Let’s take a look at when you should reach out to a tax audit lawyer after receiving an audit notice.
Navigating a Tax Audit? How an Attorney Can Help
- They Know the Rulebook Inside and Out – The world of tax law is like a maze. It’s filled with intricate rules and regulations that are hard to keep track of. An attorney knows these rules like the back of their hand and can make sure you haven’t missed any details. They can also anticipate the kinds of questions the IRS might ask you and help you prepare your answers in advance.
- They’ve Been Through This Before – Tax attorneys help people through audits all the time. They know the ins and outs, including what auditors tend to zero in on. And let’s face it, every person’s tax situation is unique. An attorney can figure out where you might be more likely to get questioned and guide you through those tricky spots.
- They Can Talk the Talk – If the IRS finds any mistakes or if there are parts of your tax return that become points of contention, you’re going to want someone who can negotiate like a pro. A tax attorney can argue your case and potentially help you avoid hefty fines or other penalties.
- They’ll Help You Get Ahead – Think of your audit as a learning experience. Your attorney can give you tips and strategies for how to handle your taxes going forward so you’re less likely to be audited again in the future.
The Opening Steps of an Audit
Taxpayers learn the IRS has selected them for audit by receiving notice in the mail. (The IRS does not initiate audits by telephone or email. A call, text, or email claiming otherwise is likely a scam, particularly if it demands immediate payment from you.)
The notice will inform you of how the IRS intends to conduct your audit: by mail (a “mail audit”), in-person at an IRS office (an “office audit”), or in-person at your home, business, or tax preparer’s office (a “field audit“). Mail audits are the least intrusive and makeup about 80% of the audits the IRS conducts. Office audits go into more detail, and field offices are the most comprehensive and searching.
The taxpayer typically has 30 days to respond to the audit notice. Taxpayers can use that time (which the IRS will ordinarily extend by an additional 30 days at least once) to gather the information the IRS has asked the taxpayer to send by mail or to bring to an office or field audit. In the case of an in-person audit, the IRS assigns the taxpayer an auditor with whom to schedule a time and place for the audit interview.
Timing Your Call to a Tax Audit Attorney
Taxpayers who receive an audit notice have the right to have a tax attorney represent them in dealings with the IRS. Hiring a tax attorney helps the taxpayer face, respond to, and to come out on the other side of an audit with the minimum possible disruption and best possible resolution.
When should you reach out to an experienced tax attorney for help after receiving an audit notice? Here’s what we suggest:
- First, take a deep breath. Don’t panic, and don’t panic-call a lawyer. That won’t help anyone.
- Next, read through the notice. Has the IRS selected you for a mail audit (most likely), or an in-person office or field audit? What information has the IRS requested? What can you glean from the audit notice about what the IRS wants to examine in your tax returns?
- Then, if you can do so reasonably quickly (in a day or two), collect the documents you think you may need to respond to the audit. The law requires you to keep the backup for your last three years of returns. Call your tax preparer for copies if you do not have them.
- Now, do a gut check. How significant is this audit? Are you a taxpayer who files a regular tax return facing a routine mail audit? Or, at the other end of the spectrum, are you a business owner who has just learned an IRS agent will be paying you and your accountant a weeks-long visit to comb through your books and records?
- Do not let the steps above take more than a few days. Your response (subject to extension) is due to the IRS in 30 days. This is not an issue you can sit on.
Having followed these steps, you should have a reasonable sense of two things: what kind of legal help you will need in managing this process, and how skilled and sophisticated that legal help needs to be. Some tax lawyers focus on representing individuals.
Some specialize in handling highly-complex tax issues in specific industries. Some, like Silver Tax Group, offer sophisticated tax law services to a wide range of taxpayers.
Do your research. Select the lawyer that seems right for you.
How a Tax Audit Attorney Can Help
Hiring a tax audit attorney to represent you in an audit gives you access to a wealth of knowledge about what the IRS cares about in conducting and resolving an audit, and how to manage the process with minimal disruption and long-term impact to you.
A tax audit attorney cannot make audits magically “go away”, but they can give you the peace of mind of knowing that you have a representative with at least as much know-how and experience as the IRS auditor assigned to your case. That goes a long way in putting you and the IRS on more-equal footing when it comes to managing and resolving your audit.
Specifically, during the audit process, an experienced tax audit attorney can:
- Supervise the collection, organization, and presentation of documentation relevant to your audit
- Communicate with the auditor on your behalf, so that you do not have to have stressful, confusing, and legally-consequential conversations about unfamiliar tax issues
- Evaluate the IRS’s proposed resolutions of an audit, and propose alternative resolutions that serve your needs and interests
- Spot potential problems, issues, and legal exposure arising from your audit as early as possible, so that you can get out in front of them and begin working on a favorable resolution
- Represent you in legal proceedings, when necessary, to appeal an audit decision
Common IRS Audit & Tax Attorney Questions
You should promptly consult a tax law attorney if you receive an IRS audit notice so they can provide guidance and representation.
Consulting a qualified tax attorney right away is highly recommended if you receive an IRS audit letter to ensure you have experienced legal representation.
It is not advisable to handle an IRS audit alone without tax law counsel as the tax code is highly complex and audits examine several years of returns.
The exact percentage of audits resulting in owed taxes and penalties varies, but your specific audit outcome depends on your documentation and legal advocacy.
If you underreported income or underpaid taxes, promptly consult a tax law attorney to discuss voluntary disclosure options before the IRS examines your returns.
If you can’t afford your IRS tax debt, a tax law attorney can advise you on settlement agreements or offers in compromise to attempt to reduce what you owe.
You should consult a qualified tax attorney promptly if you receive an IRS audit notice so they can guide you through the process.
Yes, a tax attorney can negotiate with the IRS on your behalf to attempt to reduce penalties and amounts owed based on audit findings.
Audit Notice? Don’t Panic. Instead, Contact a Tax Audit Attorney.
Do not panic if you receive an audit notice. It happens to lots of taxpayers, it’s not the end of the world, and you will most likely get through it just fine with the help of a skilled tax audit attorney. Follow the steps above at the beginning of your 30-day response window, then contact a skilled tax audit lawyer at Silver Tax Group for a free case review.