IRS Audit Representation

With the possible exception of a few extreme masochists, nobody likes to be audited by the IRS. But it happens every day and it could happen to you. Here are The Pappas Group’s 10 tips for dealing with an IRS audit:

1. Do contact the IRS auditor immediately and let him or her know that you intend to cooperate – Cooperation counts. When you resist the process or act indignant, the IRS auditor assumes you have something to hide.
2. Do consult with your tax preparer to discuss your return and the potential high risk areas – If you had your return prepared by someone else, have that person go over his file with you and explain how he arrived at the numbers included on the return. A reputable tax preparer should not charge you for this.
3. Do assemble your records by year and category of income and deduction – Organization and preparation greatly increase your chances of a favorable outcome.
4. Do consult with a tax lawyer or CPA or IRS enrolled agent experienced in representing taxpayers before the IRS audit division – Handling an audit by yourself is dangerous. The process is rife with risks. See number 8, below.
5. Do be respectful and understanding towards the auditor at all times – It never hurts to be liked, but it could be fatal to be disliked. But don’t be too nice or the IRS auditor might thing you’re trying to bribe her.
6. Don’t get angry – This is counterproductive and it will distort your judgment.
7. Don’t accuse the IRS of harassment – No one ever won an IRS audit because it accused the IRS was being a pain in the butt. This is a useless argument unless, of course, the IRS auditor is way out of line. If that occurs, you should go directly to his group manager or supervisor and lodge a complaint.
8. Don’t try to handle the IRS audit alone – Many taxpayers hire us after they have attempted to handle their tax audits by themselves. In these cases our fees are greater because we have to undo the damage already done by the taxpayer.
9. Don’t lie – This could result in an IRS criminal referral or the imposition of IRS civil fraud penalties, but almost certainly will hurt your chances of a favorable resolution of the IRS audit. Also, lying to an IRS agent will probably cause him to expand the audit to other tax years.
10. Don’t sign anything without first consulting an experienced tax attorney – Even if the IRS auditor asks you to sign something, don’t do it without first speaking to a tax attorney or experienced tax CPA or IRS enrolled agent. The IRS auditor must allow you to consult with a tax advisor whenever you request it and especially before you agree to any IRS tax adjustments or IRS statute extension waiver.