We have demonstrated a lot of success representing business and taxpayers on IRS Audits over 20 years. Rarely do our clients have to talk with the IRS. We handle it all for you so that you need not take time off of your job to handle the bureaucracy and paperwork of the IRS.
An IRS audit is an examination or review of your information and accounts to ensure you are reporting things correctly and following the tax laws.
An IRS audit or state audit could be a “Big Headache” if your tax returns were not properly prepared or you cannot substantiate receipts, proof of payments, etc. With proper representation the “Damage” can usually be minimized. However, people who are consciously cheating the system do have reason to be concerned.
The IRS conducts tax audits to minimize the “tax gap,” or the difference between what the IRS is owed and what the IRS actually receives. Sometimes an IRS audit is random, but the IRS often selects taxpayers based on suspicious activity.
We’re fully against deceiving the IRS, but we’re also against paying more than you should.
The Best Tax Representatives at an Audit
You may not want your neighbor, uncle or secretary appearing as your tax representative at an IRS audit, and with good cause, if they’re not experienced trained professionals on tax matters.
The best person to represent your business in tax matters is your CPA or your tax attorney, but ideally, you’ll seek representation by an enrolled agent. This is an individual who is authorized by the federal government to represent taxpayers in audits, appeals, and collection matters.
Enrolled agents, like attorneys and certified public accountants (CPAs), have unlimited practice rights. Enrolled agents are the only federally-licensed tax practitioners who specialize in taxation and have unlimited rights to represent taxpayers before the IRS.
This means they are unrestricted as to which taxpayers they can represent, what types of tax matters they can handle, and which IRS offices they can represent clients before.
Enrolled agents specialize in taxation and they have either passed an IRS examination or they have worked for the IRS for at least five years in a role that involves interpreting and enforcing the tax code.
Tax audit representation, is a service in which a tax or legal professional stands in on behalf of a taxpayer (an individual or legal entity) during an IRS or state income tax audit.
During an income tax audit or examination, the IRS and all states allow a taxpayer to have an authorized representative. The representative must have permission to practice before the IRS or state, and specific credentials are required. The types of representatives who are allowed to represent taxpayers before the IRS in income tax audits include attorneys, CPAs, and enrolled agents.
An audit representative develops the strategy used to defend the taxpayer’s position. He or she assists the taxpayer in preparing all documents requested by the taxing authority and typically attends all meetings and handles correspondence on behalf of the taxpayer.
A big percentage of audits are just a letter asking for more information about your tax returns, and you’re required to mail back forms proving your income or deductions. In some cases you’ll get an invitation to meet with an agent to discuss your tax forms, a scenario that sends many taxpayers into a panic.
Decide whether you need representation
If you can’t find the information they’re looking for, you’ll probably want to call a professional to advise you on your next move, but if you’ve been called in to meet with an agent, you most likely hire a qualified tax attorney or accountant.
You’ll need to grant power of attorney to your audit representative, to let them handle everything while you stay home.
You might think that bringing in a professional firm that deals with audit representation will annoy the agent or make him or her think you’re guilty – it will do quite the opposite, actually. Your IRS agent will generally prefer to deal with an experienced professional because they will be much more efficient preparing the requested information and will do so in an unemotional and professional way.
If you have received a letter notifying you that your return has been selected for an audit, do not worry! We have represented many clients in both personal and business tax audits. Even if you do not believe that you have done anything wrong or are unsure of why you are being audited, we do not recommend that you attempt to represent yourself.
Enrolled Agents (EAs) are federally-licensed tax practitioners who may represent taxpayers before the IRS when it comes to collections, audits and appeals.
As authorized by the Department of Treasury’s Circular 230 regulations, EAs are granted unlimited practice rights to represent taxpayers before IRS and are authorized to advise, represent, and prepare tax returns for individuals, partnerships, corporations, estates, trusts, and any entities with tax-reporting requirements.
Enrolled agents are the only federally-licensed tax practitioners who specialize in taxation and have unlimited rights to represent taxpayers before the IRS.
The enrolled agent profession dates back to 1884 when, after questionable claims had been presented for Civil War losses, Congress acted to regulate persons who represented citizens in their dealings with the U.S. Treasury Department.
Enrolled agents’ expertise in the continually changing field of taxation enables them to effectively represent taxpayers at all administrative levels within the IRS.
The IRS Restructuring and Reform Act of 1998 provides federally-authorized practitioners (those bound by the Department of Treasury’s Circular 230 regulations) with a limited client privilege.
This privilege allows confidentiality between the taxpayer and the enrolled agent under certain conditions.
The privilege applies to situations in which the taxpayer is being represented in cases involving audits and collection matters.
It is not applicable to the preparation and filing of a tax return.
This privilege does not apply to state tax matters, although a number of states have an accountant-client privilege.
In addition to the stringent testing and application process, the IRS requires enrolled agents to complete 72 hours of continuing education every three years in order to maintain their active enrolled agent license and practice rights.
NAEA members are held to a higher standard than the IRS’ minimum 72 hour continuing education requirement. NAEA members must complete 30 hours of IRS-approved continuing education hours each year (which would lead to a total of 90 hours for each three-year EA enrollment cycle period).
Because of the expertise necessary to become an enrolled agent and the requirements to maintain the license, there are only about 53,700 practicing enrolled agents.
Only enrolled agents are required to demonstrate to the IRS their competence in all areas of taxation, representation and ethics before they are awarded unlimited representation rights to represent taxpayers before IRS.
Unlike attorneys and CPAs, who are state-licensed and who may or may not choose to specialize in taxes, all enrolled agents specialize in taxation.
Enrolled agents are required to abide by the provisions of the Department of Treasury’s Circular 230, which provides the regulations governing the practice of enrolled agents before the IRS.
NAEA members are also bound by a Code of Ethics and Rules of Professional Conduct of the Association.
planning for their future, such as career fairs. Below are several versions of the PowerPoint presentation, including a one created by NCSEA, NAEA’s North Carolina affiliate.