The scariest moment for most people has to be opening your mailbox only to find a letter from the Internal Revenue Service and it states that you are being audited. After the initial shock wears off, you immediately begin to panic. You have absolutely no understanding of why they chose you for a tax audit. Unfortunately, there is a number of reasons why the IRS or the state would want to audit your tax return.
After the panic clears and you are in a little better frame of mind you are going to have to find an advocate or representative that will be there in the IRS agents office as you go through the whole audit process. Fortunately, the IRS rules allow you to have a representative with you in the auditor’s office.
With that said, there is a short list of the people that are authorized to represent people in front of the IRS or the state. By law, only a tax attorney, certified public accountant and an enrolled agent are authorized to represent anyone before the IRS or State Tax Agency. These representatives are highly skilled and trained in all of the necessary tax laws and have a deep understanding of how the audit and exam works.
When it comes to taxes and the ever-changing tax laws it is extremely important that there be people whose job it is to keep up on all of the changes in order to be able to help the taxpayer to get the best representation possible. For that reason alone, it is very good that the IRS only allows a select group of qualified individuals to be able to represent a taxpayer during an IRS or state audit.
Each of the three professionals has a unique skill set that allows them to specialize in tax representation (tax defense). Here are a few special qualifications that they each bring to the table and also which makes them uniquely qualified to help represent individuals or businesses before the IRS or the state.
Tax Attorney – A Tax Attorney is the top choice as a representative before the IRS as they going to be the most familiar with the tax law in the state that you live in. They also have passed the State Bar Exam and are licensed to practice law in your state. They will help you prepare for the audit by putting together a game plan that will help you get the best result from your audit.
Certified Public Accountant – One of the primary responsibilities of a CPA is to perform a number of financial services for the public. CPA’ s must pass a state-mandated certification exam to be able to offer services to the public. Audit services are something that highly specialized CPAs that work for a Tax Representation firm.
Enrolled Agent – An Enrolled Agent is a tax advisor that has been certified by the US Treasury Department and is authorized to practice in all 50 states. They are authorized to represent a taxpayer before the IRS and are highly skilled and specialized in handling tax issues before the IRS or the state, including auditing, collections, and appeals.
The IRS has a number of options at its disposal in order to ensure that every single tax return that is filed every day contains the most accurate information possible. One of the most common of all of the tool that the IRS agent has at their disposal is the audit. An audit simply means that there is a reason to believe errors were made and there needs to further review and closer scrutiny of the whole tax return.
An IRS agent actually has four different types of audits that they can use in order to get all of the information presented in the tax return is accurate according to all of the current tax laws. The following are the four types of audits; By mail IRS Tax Audit, Random IRS Tax Audit, In-office IRS Tax Audit, and Field IRS Tax Audit.
By mail IRS Tax Audit – This type of audit is used by an agent that needs to verify that some of the information on your return and may require additional proof. This normally does not require offline a professional representative. However, if you are not able to come up with the supporting documents to back up the information you put in the return, you may then need a professional assistance.
Random IRS Tax Audit – The random audit is not one that is done when errors are made, rather it is strictly a luck of the draw that your return was selected. You will not necessarily need to seek representation since it not being done in response to any issues that may have been found on your return.
In-office IRS Tax Audit – When the IRS determines it is necessary to bring you into their office for a review of your return it usually means it is quite serious and you really need to have representation. They will be able to assist you in answering the questions that the IRS Revenue Agent will have for you regarding your tax return.
Field IRS Tax Audit – This is the most serious type of tax audit and it is usually reserved for the most serious cases when the IRS thinks that there is something majorly wrong with your return. In this case, you definitely want to have representation since this meeting will take place in your home or place of business. They will be checking out your home or business for signs of underreported income.
The goal of having an experienced person representing you when you are dealing face to face with the IRS or the state is put you at ease. This will also help you to be more confident as you do not have to attend the audit meeting or face the auditor yourself, which will help to improve your chances of having the positive outcome you are hoping for.
Call us for a brief and confidential free evaluation at 877-788-2937.