Getting a tax advisor can help when dealing with IRS problems. In the beginning, when you consult with an advisor, you will have a good idea of what you can expect from the IRS auditor during this stressful time. You will be informed of what kinds of questions you will be asked and what documents they will request to see. The tax advisor has probably, or at least should have, experience in dealing with an IRS auditor.
Getting through an audit is much like playing a game of chess. Knowing your opponent’s next moves are critical, and having a game plan or strategy will help your situation. Since tax advisors have played this game before with this opponent, they are usually better qualified at limiting your burden.
During the audit, an attorney, public accountant or enrolled agent will meet with the auditor in your place. Your representative is less emotionally involved, less defensive but most importantly they are able to negotiate on the law. Since they speak the same language as the IRS auditor, they have a better chance of reeling in the prize, which unfortunately for you just means less scrutiny and/or penalties.
Once the audit has been completed and the report is final, you may be asked to sign some documents. It is vital at this stage that you have your representative review the form before placing your “John Hancock” at the bottom. You should fully understand and agree to what you are signing before you sign. Your signature is your word that everything in the documents for which you are signing is true and correct. Having someone carefully review and explain to you the repercussions of signing the document is your right so you should use it.
Make sure that your line of communication is always open with your representative. It is imperative that he/she knows everything about your return, situation or documentation received. If you are represented, it is recommended that you do not correspond with the auditor in anyway unless directed to do so by your representative. While an IRS audit is tough, you will get through it with some patience.
Showing posts with label IRS Tax Attorney. Show all posts
Showing posts with label IRS Tax Attorney. Show all posts
Thursday, July 30, 2009
IRS Audit Representation
If you decide that you need to enlist the help of a representative, there are some items that he/she should be taking care of. For example, the representative should be able to handle your audit in such a way as to limit your exposure. The less the auditor sees of you and your business means the less vulnerable you are to further probing. Additionally, the representative should lower the risk of the auditor probing into higher risk areas, other than the specific requests for documentation made in the initial audit notification.
Tax laws are quite complex and many are left open to interpretation. With that said, a representative should be able to limit the scope of the auditor’s investigation. For example, an auditor may request to look at material deductions. The representative’s job should be to limit what the auditor considers “material” to a dollar amount with the highest threshold possible. Perhaps the representative, through the use of interpretation, can convince the auditor to examine all documents, which have a higher value than $1,000. The less documents that have to be produced is limiting your exposure and preventing you from being audited any further.
Since an auditor can go back and request prior years tax returns and documentation, it is important to produce the documents requested, and only those listed, in a timely and organized fashion. The representative should appear professional and well organized. The more timely you are in your replies and the more organized you present it, the more likely the auditor will assume that your business is handled professionally and with scrutiny.
If you choose to handle the audit without a representative, there are some tips to consider. Never leave your original documents with the IRS, never give the IRS agent more or less information than what is requested, be organized, respond timely, answer questions honestly but briefly, do not argue or be belligerent, insist on getting copies of information in their files and of anything you sign. If you have a representative accessible, have them review any documents prior to signing them. Having a representative is up to you, but being informed either way is essential.
Tax laws are quite complex and many are left open to interpretation. With that said, a representative should be able to limit the scope of the auditor’s investigation. For example, an auditor may request to look at material deductions. The representative’s job should be to limit what the auditor considers “material” to a dollar amount with the highest threshold possible. Perhaps the representative, through the use of interpretation, can convince the auditor to examine all documents, which have a higher value than $1,000. The less documents that have to be produced is limiting your exposure and preventing you from being audited any further.
Since an auditor can go back and request prior years tax returns and documentation, it is important to produce the documents requested, and only those listed, in a timely and organized fashion. The representative should appear professional and well organized. The more timely you are in your replies and the more organized you present it, the more likely the auditor will assume that your business is handled professionally and with scrutiny.
If you choose to handle the audit without a representative, there are some tips to consider. Never leave your original documents with the IRS, never give the IRS agent more or less information than what is requested, be organized, respond timely, answer questions honestly but briefly, do not argue or be belligerent, insist on getting copies of information in their files and of anything you sign. If you have a representative accessible, have them review any documents prior to signing them. Having a representative is up to you, but being informed either way is essential.
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