If you're facing the prospect of an IRS audit, you may be tempted to go through the process alone. However, enlisting professional audit representation is an excellent way to reduce the stress of an audit and avoid unnecessary taxes. Here are five reasons to have audit representation.
1) An Audit Requires a Great Deal of Time and Research
Going through an IRS audit can take up a large amount of your time. While the agency will tell you which tax year is being audited and which items to submit, you'll have to locate that paperwork and their supporting documentation on your own. If you're not knowledgeable about the specific issue, you may have a hard time knowing where to begin if you try to handle the audit alone.
2) Audits Often Cover Obscure and Technical Aspects of the IRS Tax Code
Depending on your tax situation, you may be audited for violating obscure or little-known tax laws. Even worse, you may not even be aware of the error. The IRS holds taxpayers responsible for the errors and mistakes made by their tax preparers. If you're unfamiliar with your return, you may not even know which law you've broken. This is another area where professional audit representation can help.
3) The IRS Is Not Required to Help You Plead Your Case
According to the law, the IRS only has to notify you when the audit will be held, which year it concerns, and what documents are involved. The agency is not required to assist you with appealing the audit or examining your records to make an audit defense. If you want to appeal the audit or if you want to review your finances to make a case, you'll need professional assistance.
4) You Could Face Serious Penalties
Should the audit end with an additional tax liability, your bill could be substantial. The agency may find that your taxes were underreported because of an inaccurately prepared return and impose a 20 percent penalty. If the agency suspects fraud, you could be looking at a whopping 75 percent penalty! An experienced audit representative can help you assemble a case to defend yourself against charges like this.
5) You May Have to Deal with Additional Audits
The IRS can audit your returns for up to three years after filing. If the agency finds serious issues with one of those returns, it may decide to conduct audits of other years as well. In cases of suspected fraud, the IRS can extend the audit review period to up to six years after filing. Should your initial audit go badly, you may be dealing with the IRS for years to come.
Whether you choose audit representation is completely up to you. If you decide to get professional audit assistance, though, be sure to select a qualified agency with an excellent customer service record to represent you.