What to do if You Receive an IRS Audit Notification Letter

What should you do if you receive an IRS audit notification letter?  Why should you consider engaging experienced IRS audit and tax attorney Janathan Allen, who represents U.S. taxpayers facing an IRS audit or any other federal or state tax issue.  There are several things you should know if you face an IRS audit:

1. It is not in your best interest to communicate directly with the IRS.  IRS auditors and revenue officers are highly trained and skilled interrogators.  They have a specific strategy for your audit and already know how much they intend to collect from you.  Many taxpayers provide far too much information to the IRS in response to requests for information.  The taxpayer is usually making an effort to seem open, honest and cooperative.  However, the information they inadvertently disclose can allow the IRS revenue officer to expand the scope of the audit and raise the amount you will ultimately owe the IRS.  Your tax attorney, Janathan Allen, should handle all communications with the IRS from the moment you receive the IRS audit notification letter until the audit is complete.
2. Tax attorney Janathan Allen can extend the protections of the “attorney-client privilege.” These important protections are not available from your CPA, tax preparer, or independent agent.  The attorney-client privilege keeps qualifying communications between you and your tax attorney “privileged” – private or confidential.  The IRS auditor can compel a CPA, tax preparer, or financial advisor to provide work notes associated with your communications and returns, emails, texts, voicemails, and other information that may not be in your best interests to disclose.  The IRS cannot compel this type of information from your tax attorney. The attorney-client privilege was placed in US law to allow clients to have open, transparent conversations with their attorneys.  This privilege does not extend to efforts to break the law or hide unreported income or assets.  As long as you are not attempting to commit or cover up a crime, you should be able to freely discuss your situation and share information with Janathan Allen under the protections of this privilege to determine the best possible course or strategy.
3. Understanding the statute of limitations is important when managing an IRS audit.  The standard statute of limitations is three years unless the returns contain substantial errors or omissions, extending to six years.  However, there’s no statute of limitations for an unfiled tax return.  The IRS auditor may ask you to waive your rights under the statute, but whether this is in your best interest depends on the information in the file at that point and your objectives for the audit.  The statute can be a tool to push the audit to a close,  but it may be more important to agree to the extension, especially if you intend to appeal the auditor’s findings, known as a “Notice of Determination.”
4. Once the auditor has completed the audit and issued the Notice of Determination only the information contained within the audit files themselves can be appealed.  New information cannot be presented upon appeal. A taxpayer has no idea what information to disclose and what to ensure is entered as part of the file.  Your experienced IRS audit and tax attorney, Janathan Allen, can often negotiate successfully with IRS auditors and their superiors upon review to lower your tax burden and substantially reduce the amount you owe.  This is not an area or skill set most U.S. taxpayers will understand or know how to navigate.
5. In all likelihood you will not even have to speak with the IRS if you have a skilled tax attorney.  Your tax attorney should handle all communications with the IRS, increasing your own peace of mind and reducing the stress of the experience. Tax and audit attorneys work hard to limit the informational focus and scope of the audit from the moment you receive the IRS audit notification letter until the last appeal is completed.  These professionals work to limit your exposure and put a stop to the process when necessary.
6. It may surprise you to learn that most auditors are not Certified Public Accountants or tax experts.  Many IRS auditors are skilled at their work and pleasant to work with.  The central questions of the audit often come down to either an accounting issue or a complex area of the U.S. tax code.  Janathan Allen frequently has to work with the auditor to explain GAAP accounting principles or the nuances of the U.S. tax code and why accounts and transactions have been structured in a particular manner.

U.S. taxpayers face extensive financial (and sometimes criminal) risk in an IRS audit. The cost of an experienced, effective tax attorney and supporting staff from Janathan L. Allen, APC and Allen Barron is almost always a small fraction of what the IRS intends to collect from you during the audit.  If you want to save money, reduce risk, and limit the potential scope and cost of your IRS audit, you need to contact Allen Barron as soon as you receive an IRS audit notification letter or notice and before attempting to speak with the IRS yourself.

If you have been contacted by the IRS for an audit we invite you to learn more about the integrated tax, legal, accounting and business consulting services of Allen Barron and contact us or call today to schedule a free consultation at 866-631-3470.

Learn about the protections of the attorney-client privilege and all we can do to reduce the amount money the IRS is able to collect as a result of your audit.