Do I Need a Tax Audit Defense Lawyer?

The IRS conducts tax audits—referred to as examinations—by mail or in-person. Taxpayers are usually selected either randomly, by computer screening or due to a referral or an audit of a business partner or investor. Taxpayers have the option of working with the examiner directly, or with the assistance of a representative such as a tax audit defense lawyer.

Taxpayers who “have nothing to hide” may think that it will be easier to work with the examiner themselves. However, there are several reasons to consider retaining a tax attorney if you are being audited.

First, you should have a trained eye review all the information you give to the IRS. The IRS will request documentation in the form of receipts, bills, loan agreements, canceled checks, or many other types of documents. Before you hand everything over to the IRS, it’s a good idea to have an experienced tax attorney review everything. Some issues may not be easy to spot for a lay person without extensive tax knowledge or experience with IRS tax audits. If you give the IRS information that indicates that you have committed tax fraud or other tax violations, you may end up facing criminal tax charges and giving the IRS valuable evidence that incriminates you.

You may also have to make several judgement calls that have consequences that only an experienced tax professional would be aware of. For example, if the IRS asks you to extend the statute of limitations so that they can gather more information before making a tax assessment against you, should you do it? Even if you do decide to extend the statute of limitations, you can negotiate the exact terms and restrictions of the extension. A good tax audit defense lawyer will know whether you should consent to the extension and the precise terms that you should request.

Audits can involve several levels of negotiation, conferences, and appeals. You may have to deal with an examiner, then request a conference with the manager, then talk to IRS appeals, and finally petition the Tax Court to decide your case. What begins as a simple audit can end up requiring intricate knowledge of many different tax regulations and procedures, along with extensive negotiating, complying with various deadlines, and appealing decisions to multiple different decision-makers. If you would like some guidance throughout this process, consult with a tax attorney as soon you learn that you are being audited.