Your Comprehensive Guide to IRS Representation

Staff Writer - Angela
May 14, 2018
Your Comprehensive Guide to IRS Representation

If you file your taxes, there is a chance that you will be audited by the IRS. This is especially true if you have a high net worth or income. An audit by the IRS can be a routine procedure and doesn’t mean that you are in trouble. Follow this guide to IRS representation.

Many people who go through audits each year for seemingly innocent reasons. However, there are also those who may have intentionally misreported their taxes. The IRS investigates all of these instances in the same way. That is why getting an audit notice feels as if the IRS is coming after you. The best way to handle your fears is to get the right help as soon as possible. Having a qualified professional to represent you to the IRS can make a big difference in how you feel as well as the outcome of the audit.

While an audit can be a relatively simple procedure, getting an Audit Notice from the IRS and preparing for the audit can be stressful. In most cases, one of the best things that you can do for yourself is to get help from qualified professionals. Before you go into an audit, you should have the right IRS representation help you prepare and go with you to the audit meeting. That way, you will have the expertise and experience that you need to get through the audit without problems. If you have an IRS audit coming up, then here is your guide to getting the right IRS representation.

What Is IRS Representation?

You can secure IRS representation through a legal firm or professional to help you prepare for and conduct the audit process with the IRS. In most cases, your IRS representation will be a law firm or accounting firm that has extensive experience working with the IRS and preparing taxes for audits. Your representation will act as your guide and your support in navigating the audit process. Having qualified representatives is a major benefit for you since the audit process can be long and complicated. If you have an audit coming up, you should find a good representative to protect your interests.

Having an IRS representative is similar to having a lawyer advocate for you in court. The representative can look into your taxes in greater detail and make qualified arguments on your behalf. Your representative is also an expert on tax law and can help you understand what the IRS is investigating.

Do I Need IRS Representation?

In most circumstances, IRS representation is not required to complete the audit process. You have the right to represent yourself to the IRS in an audit similar to how you can represent yourself in court. However, it is relatively rare that someone is qualified to represent him or herself unless he or she is an expert in tax law. If you are not an expert in tax law, you are better off getting a representative to help you.

Going into an audit without representation can be a big mistake. While you may not have done anything wrong, the IRS is looking through your tax filings because it found something that is not right. This means that you could have filed something incorrectly, the math doesn’t make sense, or it looks like something went unreported. Regardless of the reason, you could end up paying significantly more in taxes and facing penalties as a result of the audit. Having representation before and during the audit protects your interests.

Why Was I Chosen for an Audit?

Many people feel the stress of an audit as soon as they get the notice. Although it may feel like you are in trouble, that may not be the case. Not every audit ends in a major increase in your taxes or criminal charges, either. There is an equally good chance that with the right representation, you could walk away from an IRS audit without owing more — or just needing to refile an updated tax form.

The chances of you being chosen for an audit increase with your income and net worth. The more money you have, the more scrutiny the IRS will put on your forms. However, you may be chosen for an audit at random. The IRS uses a computer to analyze research data and compare your filing against other similar filings to see if there are discrepancies. If your taxes show a sizable difference from what the IRS expects, then you could be audited.

Another reason why you may be audited by the IRS could be that some person or business that you are involved with is being audited. In many forms of business, the business tax filings can be compared to the filings of the people that work for or are invested in that business. If something strange is found on the business’ filing, the IRS may audit your taxes as well to help clear things up.

The Process

When the IRS begins the audit process, there are several steps that follow. You should make sure that you follow as many of these steps in the right order as possible, which will give you the best chance at success.

  •  You file taxes and they are flagged by the IRS for an audit. The IRS sends you an Audit Notice.
  •  When you receive the notice, you respond, choosing an audit by mail or in-person.
  •  You collect the additional data and forms that are requested by the IRS.
  •  You schedule the meeting with the IRS or return the documents by mail.
  •  The IRS meets with you or reviews your documents. Then, a judgment is given.
  •  You have the opportunity to appeal any judgment.

After you receive the Audit Notice, you can reach out to a representative who can work with you throughout the entire audit process. Before you respond to the notice, you should research and choose a representative as soon as possible and speak to a qualified professional who can tell you what to do next.

Who Can Represent Me?

Finding an IRS representation that can help you through an audit can be a bit tricky. There are special requirements that your representative needs to meet in order to represent you. Two types of certification exist, and your representative needs to have at least one of them: unlimited representation rights and limited representation rights.

A representative who has limited representation rights can only represent you in an IRS tax audit if he or she is the one who prepared your taxes. This is the person who does your taxes and actually signs the forms. This means that this person can represent you, but other professionals with limited representation rights cannot.

A representative with unlimited representation rights can represent anyone in an IRS audit regardless of who signed and prepared the forms. Common examples of professionals with unlimited representation rights include enrolled agents, CPAs, and attorneys. If you are not confident in the abilities of the person who prepared your taxes, you can find another representative who has unlimited representation rights to represent you.

What Happens Next?

Once you have chosen and arranged the services of someone who can represent you in your IRS audit, then you need to begin preparing for your audit. Your representative should be able to tell you where to go from there. Most likely, your representative will give you a list of documents that you need to find as soon as possible. Then, your representative will meet with you to prepare a strategy.

In this meeting, your representative will go over the details of the IRS’s case with you. Each argument that the IRS will make is detailed in the notice that you received. Covering each one point by point, your representative will address each of the concerns. That way, you will both be on the same page when you meet with the IRS.

It is important that you give your representative all of the information that is needed in a timely manner so that your representative can adequately prepare. You should also make sure that you have all of your tax information for the last several years available. The IRS can look into your finances and tax returns up to three years into the past. Having this information readily available will make it easier for your representative to prepare.

What Rights Do I Have?

When you are going through an IRS audit, you possess certain rights regarding the process. These rights are well documented within the processes of the IRS, and they are as follows:

  •  You have the right to be treated with respect in all dealings with the IRS.
  •  You have the right to have all of your tax information and dealings kept private.
  •  You have the right to know why the IRS wants the information that it is asking for, how that information will be used, and the consequences of non-compliance.
  •  You have the right to representation in the audit process.
  •  You have the right to file appeals with the IRS and in a court of law.

What Happens in an Appeal?

When the IRS is finished with its audit investigation and reaches a judgment on your case, there are three ways that the audit can end. In some cases, the audit ends without changes to your taxes. The IRS feels that you satisfied all of its questions and a full review means that no changes to your taxes are needed. You could also end your audit process with a judgment that you agree with.

The third possible outcome is a judgment that you don’t agree with. If this is the case, then you have the option to file an appeal. Your representative can help you with this. You can also request a meeting with an IRS manager. You, your representative, the IRS auditor, and the IRS manager will meet to discuss the findings of the audit and to discuss your further options. From there, you can either file the appeal or go into mediation with the IRS to resolve your differences.

Negotiating With the IRS?

If you find yourself in a position after your audit where you need to reach a settlement with the IRS, your representative can help you negotiate with the IRS. As your representative, he or she will have a detailed knowledge of your assets, financial situation, and liability. That makes your representative one of the best people to represent you.

A settlement with the IRS is not always possible. The IRS is hesitant to offer settlement agreements as some would try to take advantage of it to get out of their debts. However, settlements are accepted in some limited, legitimate cases. To qualify for a settlement, you have to meet the IRS’s criteria and prove that you cannot pay all that you owe no matter what measures you take. Your representative can help you file a settlement offer if you will qualify for one, and he or she can argue your case to the IRS.

Final Thoughts

Finding a qualified representative can be difficult if you don’t have a way of properly vetting them. At Solvable, we review companies that can represent you to the IRS and provide detailed and unbiased appraisals of their work. With so many representatives out there, you need to be able to narrow the field to the ones who can be the most effective for you. Our reviews rate each of the businesses so that you can quickly sort through them and find options that meet your criteria.

You can also find more information about the IRS, its practices, and possible representatives at Solvable.com. Our website contains several articles that can teach you everything you need to know about handling the IRS audit process. Learning more ahead of time is one of the best ways that you can make sure that you are prepared for anything in your dealings with the IRS.

 

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