Tax audits are a night mare that plagues even the most conscientious of tax payers. That is why it is so important to know your rights, and where to turn when you are contacted for an audit. Below you will find some basic information to help you if you find yourself in the tax audit process.
Who can represent you?
During an audit you can represent yourself. However it is a much better idea to have a representative represent you with the IRS. The law permits you to have a CPA, an enrolled agent, an attorney, or someone who has your Power of Attorney represent you at any audit hearings as well as with any communications.
By having a representative who is familiar with tax laws and preparation you create a legal barrier between you and the IRS that could help you with items such as answering questions correctly and in a time frame that best meets your needs, or possible deduction or penalty negotiations. A knowledgeable tax representative who is familiar with the audit process is going to know things to say, and how to phrase them to the IRS agent better than you will. This could save you lots of money in the long run.
Must I attend the audit?
No. You are in no way obligated to attend the audit as long as you have a representative present. The only time you are required to attend is if you are subpoenaed and that is only done in extremely bad situations. As long as you have a representative that you trust to be able to handle your tax audit evaluation and negotiations, then you don’t have to be at the hearing.
Should my original tax preparer represent me?
You would naturally think this might be a good idea since they should have all of the answer to why they filled out the form the way they filled out the form. However, this is not correct. Often it is best for the tax payer to take the ignorance road about taxes and simply say that your tax preparer asked you a few generic questions that you answered and they did the rest. You original preparer will not let you take this path. By having a fresh pair of eyes represent you, you retain the ability to play dumb, while also creating a negotiating opportunity for the new representative. Plus if the errors are due to your original tax preparer, they may not understand or care about what they did wrong which could create bigger issues for you.
No one wants to be audited by the IRS. However if you are there are people and organizations such as the ASTPS, American Society of Tax Problem Solvers, who can assist you with the auditing process in an informed and knowledgeable manner that could potentially save you a ton of money when all is said and done.