Most taxpayers will never get audited. In 2021, the audit rate for taxpayers with income under $1 million was less than 1 percent. But tax audits have a reputation that precedes them, and getting an audit notice in the mail is enough to make a person’s blood run cold. If you’re one of the unlucky few, you may not know what to expect from an IRS tax audit or state audit.
Very few audits are random. Most often, audits happen because of certain red flags that put the IRS or state taxing authority on alert for fraud or errors. Examples include:
- You never filed one of your tax returns for a prior tax year
- You received a sizable financial gift
- Your income changed drastically from previous years (either much high or much lower)
- You took higher-than-average deductions, losses, credits, or charitable donations
- You’re self-employed or own a small business – especially one that’s cash-based
It’s possible for an audit to wrap up quickly and easily, but many audits get complicated in a hurry. Finding the right tax audit lawyer for audit representation can relieve your stress and give you confidence that your problem will be properly resolved with the IRS or taxing authority. Not all tax lawyers specialize in audit defense, so it’s important to know how to find the right tax audit representative.
Do I Need Tax Audit Representation?
Why do we hire professionals with specialized training? Because they know all the details and potential pitfalls of the job, and that experience and expertise carries a lot of value. You might be comfortable changing the oil in your car, but if your head gasket is leaking, you most likely need a mechanic to make that complicated repair. A professional should have the right tools, the valuable experience, and knowledge of the right strategies to use when something goes wrong. The same is true for tax professionals.
Tax audit representation can be invaluable for getting through your tax audit. A good tax lawyer should be intimately familiar with the tax code and IRS procedures. They should remain cool under the pressure of the IRS’ scrutiny, helping you find the records you need, communicating with the IRS for you, and negotiating on your behalf when problems arise. If there is a threat of criminal charges, such as tax fraud, you will absolutely need a lawyer.
Your time is valuable as well. What may take hours and hours for you to accomplish will be much faster in the hands of a professional. Instead of spending many hours of your time and stressing over tiny details, you can have the confidence, peace of mind, and time savings that come from hiring a pro.
With that said, there are different levels of tax audit, so it’s important to know what you’re dealing with. For a simple desk audit or mail audit, you may not need representation.
- Desk audit / mail audit: Desk and mail audits can sometimes be simple matters. The IRS sends you an auto-generated notice, and you need to respond by either mailing them any documents they request or filing an amended tax return to fix any errors that were made.
- Office audit: An office audit is a more involved process where you meet with an IRS agent at their office and bring any documentation, records, receipts, or other tax documents that they ask to see. Tax audit representation is frequently important in an office audit, especially when answering questions from the agent.
- Field audit: In a field audit, an IRS agent visits your home or business to conduct a more comprehensive audit. The agent will likely want to review many documents in depth and ask you detailed questions. The field audit process is often stressful and time-consuming, especially if you don’t have professional representation.
If you’re unable to provide the documentation or records that the IRS is looking for or uncertain how to gather them, a tax lawyer can help with the explanations, negotiations, and level of organization needed to satisfy the audit. As an audit becomes more complicated, this type of support becomes increasingly important.
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Questions to Ask Before Hiring a Tax Lawyer
When you choose representation for something as serious as a federal or state tax audit, you need to know that you’re in good hands. So, how can you tell if you’ve found a good tax attorney to provide your audit defense? Here are some useful questions to ask a lawyer before committing to their services:
- Do you think I need tax audit representation for my situation? If so, why?
- What kind of tax work do you focus on? (Not all tax lawyers do the same type of work. An attorney who focuses on tax planning may not have expertise in audit representation or debt settlement.)
- Are you an enrolled agent who is authorized to represent taxpayers before the Internal Revenue Service?
- What does it cost to hire you? Do you charge a flat fee or an hourly rate?
- How will your approach to tax audit defense help me with my tax audit?
- Are you licensed to represent me for a federal tax audit? If my audit is a state tax audit, are you licensed in the relevant state?
- Do you have experience representing clients in audits before the IRS? If so, how long have you been doing audit defense work, and how many audits have you handled?
- Have you represented clients with similar situations to mine (i.e., self-employed, independent contractor, small business owner)?
- How is your firm rated by the Better Business Bureau?
- Will you go with me to an in-person tax audit?
- How will you keep me informed about the status of my audit and your communication with the IRS?
- Do you have a secure online portal for sending tax documents with sensitive information?
A good tax attorney will have no trouble giving you complete and forthright answers to all these questions and more. And if an attorney offers a free consultation, there’s no downside to having a conversation about your tax audit and find out if hiring an attorney is the right move for you.
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Choose S.H. Block for Tax Audit Defense
S.H. Block Tax Services is rated A+ by the Better Business Bureau. Founding Attorney Stanley Block has over 50 years of experience practicing tax law in the state of Maryland, and our firm has more than 100 years combined experience with tax resolution. We have on-site attorneys at three convenient locations in the state of Maryland (Annapolis, Baltimore, and Columbia), and we offer our services on a flat-fee basis.
What sets our firm apart is that we truly care about our clients’ success – and we prove it through our approach to communication and customer service. We know that tax issues, especially tax audits and tax debt, can be crushing problems for our clients. We have compassion for you, understand your situation, and will do everything we can to help you get back on track.
Each client comes to us from a unique background, and we want to learn about that background and build a strong relationship with you so that we know how to find the best solution to resolve your tax issues. When you work with our team at S.H. Block Tax Services, you can feel confident that we’ll work tirelessly to help you, drawing on our extensive experience and expertise to save you money and time.
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Schedule Your Free Consultation Today
If you’re facing a stressful tax audit and need the help of a tax lawyer, call us at (410) 793-1231 or contact us online to schedule your free consultation and ask us anything that’s on your mind. We want you to feel confident that the tax lawyer you choose is the best one for you.
Or, learn more about our tax audit representation services.
Internal Revenue Service. (2022, May 6). IRS Statement — Updated IRS audit numbers [press release]. Retrieved from https://www.irs.gov/pub/irs-utl/statement-for-updated-audit-rates-ty-19.pdf
The content provided here is for informational purposes only and should not be construed as legal advice on any subject.