Whether you’ve been audited at random by the IRS or there were major flags in your tax reporting records that have caused the IRS to want to take a closer look, it instantly becomes a stressful time in your life until the audit has been completed and all your tax issues resolved. As uncomfortable as even the thought of being audited is, if the IRS has contacted you and informed you that they want to take a look at your records — up close and personal — there’s no way around it. There’s no way out of it — except through.

You can choose to go it alone and meet with the IRS auditor by yourself with hopes that you’ll understand why you’ve been audited and what they’re questioning, or you can completely remove that burden from your shoulders and your sleepless nights and hire the expertise of an IRS tax resolution services company to represent you throughout the entire audit process.

If you are confident that all your “Ts” have been crossed, all your “Is” dotted, your case is relatively straightforward, and you have all the paperwork, receipts, and information available to support the tax documentation you filed, it might make sense to represent yourself during the IRS audit or investigation.

Nonetheless, you should only consider handling the case yourself if all the following are true.

• You are confident speaking publicly in stressful situations.
• You have a good understanding of all the relevant tax forms.
• You ARE NOT relying on any unofficial Internet sources as part of your defense.
• You can competently research tax laws to support your case.
• You understand all options available to you in case you lose.
• You keep organized records with all the necessary information available at your fingertips.
• You have the time to continue a battle that may go on for years.
• You are not easily rattled or angered under potentially stressful situations.

How to Prepare Yourself For An Audit

Although the IRS website doesn’t lend itself to helping taxpayers defend themselves, there is some good information that will assist you with an audit if you are determined to defend yourself. IRS Publication 556, “Examination of Returns, Appeal Rights, and Claims for Refunds,” provides 20 pages that explain the audit process, how to appeal an IRS decision, and other topics related to an appeal.

Part of the IRS Publication 556 is an explanation of the Taxpayer Advocate Service offered by the IRS. Remember that although the IRS says this service is on your side, all they really do is tell you what stage your audit is in and who is your auditor. Although the advocates do offer an ear for complaints, ultimately the IRS pays them. Yes, their advice is free, but as with most things, you usually get what you pay for.

Tips for Defending Yourself

• Don’t volunteer information. Restrain yourself to simply answering the questions that are asked and keep your lips sealed the rest of the time. Offering additional information is like chumming the water to attract sharks. One whiff of blood and it will unleash a feeding frenzy that may result in fines and additional penalties.
• Understand all your rights. Along with IRS Publication 556, study IRS Publication 1, “Your Rights as a Taxpayer.” The Declaration of Taxpayer Rights lists eight areas where you’re protected as a taxpayer. Know them and use them as applicable during the audit.
• Keep your records organized. There will be many instances during the audit when you are asked to justify a specific deduction or line item entry. If you have your records neatly organized you not only can answer the questions easily, but also can make the auditor’s job simpler. Making a government employee’s job easier never hurts, especially in a tax audit.
• Make sure you have copies of everything. First, don’t bring originals to the audit. Chances are they will disappear, and you may need them in the future. Duplicates of important documents will come in handy if something suddenly has gone missing. Saying you can’t find something is not going to help your case.
• Don’t bury your head in the sand (any longer). The IRS is not going to go away and forget about you if you choose to leave the mail containing your impending audit unopened. Showing a willingness to cooperate will put you in a better position should you lose the audit.
• Frivolity is not a good idea. Yes, you may claim that your house is a sovereign state or that you are 1/16th Native American (if it’s not true). The tax judge will find this neither amusing nor endearing. They’ve heard it all before and will drop the hammer on you quicker than you can say, “I was kidding.”
• Don’t give up. They may think they are, but IRS agents aren’t always right. Sometimes audits result in a larger refund for the taxpayer. Don’t assume just because you get a notice that you are being audited that you are in the wrong. If you’re going to defend yourself, bone up, get organized, and go to the mat.
• Ignore the Internet. Aside from going to actual resource sites like the IRS or an experienced IRS tax resolution services company, you’re only going to dig yourself a deeper hole by counting on the Internet as your primary (and only) resource for expert advice about IRS audits. If you chose not to hire a professional tax resolutions firm to initially calculate and prepare your taxes (that now got you into this audit) you should consider signing on a tax attorney to help you with the audit.

It takes a smart person to realize their limitations. If you don’t think you have the knowledge or will to fight for your taxpaying rights, it’s time to consider hiring a professional tax team of tax specialists, attorneys, and accountants that have experience dealing with IRS audits.

If you use a competent tax preparation firm to file your annual return, you’re already ahead of the game. Chances are great that not only are there no mistakes in the return, but also that your firm will represent you through every step of the audit and appeals process. Although hiring a tax firm may seem like more of a monetary investment than facing the IRS on your own, you simply can’t put a dollar value on the time and stress you will save yourself by not going it alone.

Benefits of Hiring Tax Audit Professionals

• Experts know what they are doing. Just as you’d hire a house painter to change the color of your home or a caterer to provide food for a large event, you need to let people with experience do their job. If a paint job comes out wrong or the finger sandwiches aren’t to your liking, it can be annoying but it’s not a disaster. If you lose an IRS audit because of ego or in an attempt to save a few dollars, it can have a lasting impact on both your business and your family’s economic status.
• Decoding the tax code. Have you ever read the U.S. Tax Code? No one can blame you if you haven’t; it’s deadly dull. But being called on the carpet for an audit isn’t the time to try and decipher a complex set of regulations. Professionals like the tax specialists, attorneys, and accountants at Top Tax Defenders go through training every year to stay up-to-date with the latest code changes.
• Reduce stress. An IRS audit is extremely stressful even when you have a professional team on your side. When you try and fight an audit yourself, the stress is 10 times as great.
• No intimidation. Tax lawyers deal with the IRS on a daily basis and are not impressed by the sometimes heavy-handed tactics. Your team will know when to resist empty threats as well as what battles need to be fought.
• Understands limitations of law. Your professional tax team also knows exactly what the IRS is capable of in terms of issuing fines and penalties. They can advise you when a settlement is a good deal, as well as when the IRS is bluffing.
• Insider knowledge. Many professional tax firms have experience on the other side of the table. Working as tax examiners gives these firms the inside knowledge necessary to know how to counter the IRS at every step of the audit process. They know what proposals will pique the IRS agent’s interest, as well as which ones will be summarily rejected. Further, a U.S. Supreme Court ruling essentially bans people under audit from investigating IRS agents for possible conflict of interest. Although it is still possible to investigate agents, you must first convince the court that there is a plausible motive for an agent to act improperly, which will be difficult to do.

When deciding whether or not to hire a team of professionals when called to meet with the IRS auditor, consider the severity of the charge against you. If the IRS is just asking for more information or claims you filed an improper deduction, it’s a much different case than if they are accusing you of tax fraud. Remember that experienced tax firms have a set of procedures already in place for defending clients from an IRS audit.

Lawyers and accountants with years of know-how developed from countless meetings with the federal government have a head start on your tax problems; they’ve been there before and know the protocol, procedures, and routine. They know what forms you need and when to submit them, as well as all the tricks of the trade to get you out of a potentially-sticky situation. Having an experienced representative on your side will nip any IRS shenanigans in the bud, including the asking of inappropriate questions designed to make you share additional information.

Instead of going through the stressful process of an IRS audit alone, seek audit representation from an experienced tax firm. Top Tax Defenders has 27 years of experience with the IRS, and knows what to expect from an audit. Contact us today to get the representation you deserve.