IRS Audit Attorney: When To Hire A Tax Lawyer

Receiving an IRS notice in the mail that your account has been selected for a tax audit can be a stressful experience for anyone.

Even if you feel confident that you are up to date on filing your federal income tax returns and that your reported income is accurate, you may feel more comfortable seeking professional representation, such as an IRS audit attorney, to offer guidance throughout the tax audit process.

If you are currently or have been audited by the IRS and are looking to resolve or amend your tax return, contact us today for a free tax consultation.

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Key takeaways:

  • An IRS audit attorney is a type of lawyer specializing in tax law who can provide specialized advice to taxpayers who are being audited to ensure they achieve the best and fairest outcome of the tax audit.

  • Taxpayers may be audited due to perceived problems with their submitted tax paperwork, random selection and computer screening by the IRS, or due to related examinations of other taxpayer or business accounts.

  • The main benefits of hiring an IRS audit attorney if you are being audited include utilizing their extensive knowledge of tax laws and reducing the accruement of unexpected tax liabilities and financial penalties.

  • Taxpayers can choose the best tax audit attorney to benefit their tax situation by evaluating their expertise, experience, professionalism, advocacy, and ability to avoid tax penalties.


What Is An IRS Audit Attorney?

An IRS audit attorney is a type of lawyer specializing in tax law who can provide specialized advice to taxpayers who are being audited to ensure they achieve the best and fairest outcome of the tax audit.

Tax lawyers can specialize in federal or state taxes, helping taxpayers through the tax audit process and offering advice about how to achieve the best outcome and avoid the accruement of unexpected tax liabilities, penalties, and fees.

What Is An IRS Audit?

An IRS audit involves the review or examination of a taxpayer’s account to confirm that all of the information listed on their filed tax return is accurate, such as the total income reported and tax exemptions claimed, and that the tax preparation was in compliance with federal and state tax laws. 

Taxpayers can be selected for an IRS audit for a variety of reasons that do not necessarily indicate that there has been an issue with their taxpayer history. Furthermore, being eligible to receive a tax refund will not necessarily flag your account for being audited. Similarly, filing an amended tax return does not impact the auditing of the tax return that was initially filed, as an amended return may also be subjected to the tax auditing process.

Some of the reasons you may be selected for a tax audit include:

  • Perceived Problems With Your Submitted Tax Paperwork

If the IRS detects a discrepancy in a taxpayer’s submitted federal tax return, they may issue a tax audit to determine if those details reported were correct. This can also occur if the IRS observes that taxpayers have deposited large amounts of cash, have claimed significant itemized deductions, are self-employed, or work in a home-based business. While these triggers do not necessarily indicate a problem, they may

  • Random Selection and Computer Screening

Even if you have been notified that your account is being audited, it does not necessarily indicate that you have made a mistake in previously filed tax returns. The IRS sometimes selects tax returns based on a statistical formula that compares tax returns against the “norms” of tax returns filed with similar formats and information. This normal baseline is developed using an audit sample of statistically-valid and random returns that is used for the National Research Program within the IRS. In this case, your account may be subject to an audit for the simple reason that the IRS is updating its data related to tax returns.

  • Related Examinations

While some tax audits are issued randomly, there are times that specific accounts are audited due to their relation to other taxpayers. For example, if a taxpayer’s submitted tax return includes transactions or issues with other targeted taxpayers, such as investors or business partners, those related returns may be selected for audit.

Why Are IRS Audit Attorneys Valuable?

IRS audit attorneys are valuable to taxpayers who are facing an audit because they are specialized experts in the knowledge of tax law, they are experienced in evaluating IRS audits for taxpayers of a variety of situations, they can protect a client’s rights in areas they may not have been aware of, they can legally represent their clients in court.

They can potentially minimize the tax liability owed to the federal government as a result of the tax audit by identifying which tax breaks, such as credits and deductions, the taxpayer may qualify for. 

Are Tax Lawyers And CPAs The Same?

If you received a notice about a future tax audit on your account, your first instinct might be to hire a certified public accountant (CPA) to assist you in preparing for the audit. CPAs are valuable tax professionals with an in-depth understanding of the Internal Revenue Code and how to optimize tax advantages to lower your tax liability. However, while CPAs possess the knowledge and skill sets to help individuals maximize their tax savings, these experts do not specialize in tax audits and may not be able to defend clients during a tax audit situation. 

Tax attorneys, on the other hand, are licensed professionals that not only have the knowledge to understand the details of their tax audit situation, but also have the authority to negotiate with the IRS on behalf of the taxpayer as well as defend them in subsequent litigation, if necessary. Licensed tax attorneys are the most qualified type of tax professional to interpret tax law, provide personalized tax advice, protect assets from legal seizure, and advise on the most beneficial course of action during a tax audit.

While there are some situations where licensed CPAs are the most qualified professionals to offer tax advice, when it comes to tax audit defense, tax audit lawyers are the best-equipped option to provide services that can help taxpayers protect their finances.

Benefits Of Hiring An IRS Audit Attorney

There are several benefits to hiring an IRS audit attorney to represent you in the case that you are selected for a tax audit. 

Extensive Knowledge About Tax Laws

The first and most obvious benefit of utilizing a tax audit lawyer to assist you during an IRS audit is knowing you have a person on your side who fully understands the context of the situation. A tax attorney can help explain the definitions of different legal terminology and provide clarification about the procedures that will take place throughout the duration of the tax audit.

This can include the discovery of the reasons or circumstances behind your account being audited, such as if an auditor is looking into your account with the suspicion of criminal tax evasion. Having a tax law specialist represent you during your tax audit can help you take the approach of defense if you are being examined for tax fraud, or in general, can prevent further tax issues from arising.

Reduce Resulting Financial Penalties

It is always beneficial to have a tax attorney on your side in the case of a tax audit, but in the case that the audit produces unfavorable outcomes, having an experienced professional to offer guidance can help them reduce the financial burdens that are the outcome of their audit case. In dire situations, tax audits can result in the revelation of unpaid back taxes, accrued penalties, fees, and interest, and in severe cases, potentially criminal charges. 

Having a tax attorney present throughout the audit process can encourage the auditor to interpret your tax case in a positive light and ensure that tax laws are applied in your favor wherever possible. Tax audits are conducted with a similar process to other types of legal proceedings, containing strict protocols and conduct rules that the auditor must follow to ethically pursue the case. With this knowledge in mind, tax attorneys can ensure their clients are not receiving any misconduct from the auditor, such as crossing any boundaries or asking inappropriate questions that may be confusing to the taxpayer. This can ensure that the taxpayer does not offer any unnecessary information that they are not legally required to combine.

Acting As Your Defending Representative

If a tax audit on your account results in the discovery of unexpected tax liabilities or other financial stressors, taxpayers can benefit significantly from having an experienced tax audit attorney to defend them throughout the process.

If their tax lawyer was able to detect the same issue the auditor does, they may be able to defend the taxpayer in the situation and negotiate the terms before the case is taken to court.

If the taxpayer did not have a professional tax audit lawyer to guide them along the way, they may end up facing more significant consequences if an issue arises than they would have if the problem was resolved earlier.

What Potential Penalties Can Taxpayers Face After Being Audited?

 If your account is audited, there are three potential outcomes you could face:

  • The auditor found no issues with your paperwork, and your initial tax resolution is still sound.
  • The auditor made a change in your tax paperwork, and you agree with all of the suggested alterations.
  • The auditor made a change in your tax paperwork but you disagree with the suggested alterations.

Don’t worry yet if you disagree with what the auditor found upon reviewing your tax return – you still have the option to file an appeal with the IRS to resolve your tax situation. In this case, receiving help from an experienced tax audit attorney can help optimize your outcomes. There can be severe consequences for failing to comply with federal tax law, such as tax evasion or tax fraud, so if the IRS believes you are guilty of either of these offenses, having a tax professional on your side may be essential to prevent you from facing the associated penalties, including:

  • Spending up to five years in federal prison
  • Owing up to $100,000 in fines to the IRS

What To Do If You Disagree With The Outcome Of Your Tax Audit

If, upon receiving the results of your IRS audit, you disagree with the tax decision of the auditor, you have the option to file an appeal with the IRS to resolve the disagreement. Depending on the situation, it is likely that this disagreement will be able to be settled by contacting the IRS directly and without taking the case to tax court. However, if the taxpayer does not want to appeal to the IRS, their only other option to resolve the disagreement will be to take the case to tax court. In this situation, an IRS audit attorney would be a significant asset in improving the outcome of the appeal. 

 If you want to appeal to the IRS, the first thing that will happen is that the collection office or IRS will consider your protest and determine if a resolution can be found before the dispute must be sent to the Office of Appeals. 

When To Consult An IRS Audit Attorney

If you have received a notice of audit from the IRS and hope to achieve the best outcome regarding your tax savings, it is best to consult with an experienced IRS audit lawyer as soon as possible. Consulting with this type of tax professional even before the auditing process begins can be beneficial in helping you understand your options regarding the auditing process and ensure your tax document preparations are conducted appropriately.

While many tax audits are randomized and issued for the benefit of the IRS generating accurate and up-to-date tax statistics, in the case that your tax return was targeted for a tax audit because you are suspected of tax fraud or tax evasion, having a legal professional that can grant you the confidentiality of attorney-client privilege will likely result in the best outcome when it comes to tax audits.

If you consult with an IRS audit attorney early in the audit process for tax help, you will be more likely to save money on tax expenses and avoid severe penalties that can come with discrepancies in tax filings.

How To Choose The Best IRS Audit Attorney

If you have received an IRS notice that your federal income tax return is being audited and you have decided that an IRS audit attorney will be helpful in guiding you through the situation, here are some characteristics you should seek in a tax professional to ensure they are the best fit for helping you resolve your unwanted tax issues:

1. Expertise

Taxpayers should select an IRS attorney who has a thorough understanding of federal, state, and local tax laws that are relevant during an IRS audit defense. They can feel confident that their tax audit will be resolved to the taxpayer’s benefit when utilizing the expertise of a tax professional with a comprehensive understanding of the federal tax code.

2. Experience

Another essential characteristic a taxpayer should look for in an IRS audit attorney is their experience in assisting clients through the tax auditing process and achieving positive outcomes. The licensed tax lawyers at Ideal Tax have close to 15 years of experience in providing advice to taxpayers and successfully achieving the best outcome possible in the case of a tax audit.

3. Professionalism

While some taxpayers may feel confident in their ability to learn about their tax background and understand the basic tax laws regarding their situation, having an experienced IRS audit attorney to negotiate with the IRS on their behalf and articulate the complicated details of the tax code will undoubtedly earn them respect in the tax court and ensure that all options are explored in regard to resolving the tax issue in the taxpayer’s best interest.

4. Advocacy

While the IRS offers options for taxpayers to find tax relief, having an audit attorney to advocate for their situation can help ensure the most beneficial option is pursued to help their situation. Taxpayers who advocate for themselves may be unaware of the extent of their tax relief options, so by allowing an audit attorney to help, they are more likely to achieve tax savings following the audit. 

Negotiation can be intimidating in any context – especially when the situation involves extensive legal jargon and severe consequences, such as potential fines or jail time. For this reason, hiring an expert tax audit attorney who is not only confident in the details of the most recent tax laws but also has experience negotiating these complicated topics, can produce monumental results compared to taxpayers who try to speak on their own behalf.

5. Avoiding Penalties

Usually, an issue in reporting income that results in tax liability is not what causes financial hardship for the taxpayer. Rather, it is the interest, fees, and penalties of inaccurate filings that can be stressful. Tax audit attorneys are experienced in legal processes that can help them negotiate you the taxpayer’s behalf during the auditing process and work out a solution with the IRS that results in the taxpayer owing as little money as possible to the IRS.

While receiving a notice that your account will be receiving a tax audit might catch you off guard and cause you anxiety, with a licensed tax audit attorney on your side, you have nothing to worry about. Our team at Ideal Tax is experienced in guiding taxpayers of all backgrounds through the tax audit process, helping them understand any risk and prepare all of the required documentation to achieve the best outcome.

Contact us for a free consultation today and learn if our tax audit attorneys would be a good match for your tax situation, or utilize our services for comprehensive tax planning that takes the stress out of tax season.

Luis Ceja, Author
Luis Ceja, Author

Luis graduated from California State University Fullerton with a B.A. in Political Science. As the Director of Operations at Ideal Tax, he combines years of tax related knowledge with industry expertise, solidifying his prominence in the field.

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