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IRS Audit and Audit Representation – How to Handle an Audit

With changes to federal regulations in tax law every few years, it can become difficult to keep track of the details of your taxes. Perhaps you made a mistake when you filled out your W2 form, or maybe the details of your life have changed and you forgot to file the necessary changes with the IRS. Whatever the reason behind your audit, it can be a stressful and worrisome experience if you aren’t familiar with tax law. Fortunately this guide is available to help you through the difficult experience of facing an IRS audit, and audit representation is easier to come across than you might have thought. So here are some tips, tools, and guidelines to help you through your audit.


Background Information on the IRS

To begin, let’s explore the background of the IRS and its authority as a regulatory entity presiding over taxation in the US. The IRS is acronym for the Internal Revenue Service, and it is a branch of the federal government’s Department of the Treasury. From its headquarters in Washington DC, the IRS consists of almost 90,000 employees who collect taxes from US citizens and transfer those funds to the Treasury Department to keep the government and its municipal functions running efficiently in service of those tax paying citizens. While this system sounds fairly straightforward on a superficial level, the actual operations of the government agency are much more complex and constantly changing to reflect the shifting economic landscape of the country. As most working professionals are busy enough with their daily jobs, taking the time to familiarize themselves with every change in tax law can be exhausting. As such, the initial piece of advice for handling an IRS audit is to avoid getting the audit in the first place. While young people in the fledgling stage of their careers might think of outside tax accounting services as a superfluous expense, those further along in their careers are familiar with the necessity to delegate tax compliance to an outside agent.


Type of Audit

There are three distinct ways in which the IRS can notify an individual or business of its audit. The type of audit to which one might be subjected roughly corresponds with the severity of the audit. These three types of audits include a correspondence audit, an office audit, as well as an in-home audit.

  • Correspondence Audit: As the least severe type of audit that could arise, the correspondence audit is likely indicative of a missing file, form or report from one’s annual tax filing. Because these sorts of clerical errors happen frequently, there is usually no cause for concern. You audit may be resolved with as simple a solution as sending in the missing file so that the IRS agent can ensure everything is in order for your taxes.
  • Office Audit: While not quite as simple as the correspondence audit, an office audit is not necessarily something to be worried about. The IRS issues randomly selected inquiries into business and individuals in an effort to ensure the best possible compliance with tax regulations. You could potentially just be one of those randomly selected individuals chosen for an audit, in which case there is no need to worry. However, because an office audit is more thorough and involved than a correspondence audit, you should take greater care in handling the situation, perhaps seeking outside assistance and legal representation from a company like
  • Home Audit: Generally the most severe of the three types of audits, the home audit should be taken seriously as an inquiry into one’s personal financial and taxation history looking for instances of tax fraud such as under-reported income or excessive and illegitimate business write-offs. The IRS is likely to request a large volume of records ranging in anything from bank account records to tax filings from previous years.


Tools for Audit Recourse

When you are facing an audit, it’s understandable to be concerned about the penalties to which you might be subjected. However, there are certain tools available to everyone that you can use as recourse to an IRS audit and audit representation can make a huge difference. The two that you will likely find the most useful in such a situation are audit reconsideration and the audit appeals court.

  • Audit Reconsideration: One of the most powerful tools available to an individual facing an audit of any kind is an audit reconsideration. The IRS will reconsider an audit if it arises that the audit was filed after the statute of limitations has run out for the individuals past tax mistake. If the audit determined that an individual needed to pay more than he or she was legally obligated to pay, the audit may be reconsidered as well.
  • Audit Appeals Court: If the IRS proves unwilling to reconsider your audit, you may still be able to avoid paying penalties. If you are undergoing an IRS audit and audit representation you’ve hired finds that you have been incorrectly taxed, you are eligible to appeal your case and have it reexamined with the proper information presented.

Hopefully, you’ll never have to go through an IRS Audit, but if you do, now you know steps to take,




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