In recent weeks, the Obama Administration has made a series of announcements that indicate its plans to invigorate IRS examinations and enforcements, and arm the IRS with new statutory tools for challenging a taxpayer's treatment of certain transactions.   

If you receive an audit notice from the IRS, you should immediately contact us to learn how we can develop a legal strategy for responding to the IRS. By promptly identifying legal and tax issues, organizing your tax and financial documentation, and developing an effective legal strategy, we can put you in the best position to avoid or minimize tax assessments, penalties and interest.

The Audit Process

An IRS examination may be conducted by mail or through an in-person interview and review of the taxpayer's records. The IRS may conduct an office interview at an IRS office or a field audit at the taxpayer's home, place of business, or representative's office. The taxpayer may request a change, if the time or place scheduled by the IRS agent is not convenient.

The IRS audit will begin with a notification letter from an IRS agent. The notification letter tells the taxpayer which records will be needed. Taxpayers may be represented by an attorney or certain CPAs. If the taxpayer is not present at the IRS interview, the representative must have proper written authorization in the form of a power of attorney. We recommend that one of our tax attorneys accompany you at the in-person interview. In some cases, it would be appropriate for one of our tax controversy attorneys to meet with IRS agent separately as your representative.

Our tax attorneys work closely with our client's officers and directors, accounting department, tax return preparer and financial auditor to organize and understand their tax, legal and financial records. Based on this understanding and organization, we provide prompt, well-documented responses to the IRS.

INFORMATION DOCUMENT REQUESTS (IDRs)

IRS examinations are conducted by through a series of document requests by the IRS agent. The process is designed to encourage collaboration between the taxpayer and IRS agent so both sides may agree on the information and documentation that is relevant to the examination. The agent will explain the IDR process during the opening conference.

Based on our experience responding to IDRs, our tax controversy attorneys are able to anticipate future lines of questions, and develop a comprehensive legal strategy that responds to the IRS's precise questions, while laying the groundwork for responses to future inquiries.

HOW TO PREPARE FOR AN IRS AUDIT?

When a taxpayer has received notice of an IRS tax audit, the taxpayer should recall the events and transactions of that tax year, any problems which occured during that year, as well as any unusual tax positions taken by the taxpayer on the tax return being audited. The taxpayer should begin assembling copies of the tax return and supporting financial statements and records. Also, the taxpayer should assemble an audit team consisting of the tax return preparer, a tax controversy attorney, and a team of key employees who can gather and explain the taxpayers financial and business records and practices.

As you begin planning a legal strategy to an IRS examination, candor and clear communication between the client and tax attorney is critical. If you have taken any tax positions that the IRS is likely to challenge, it is imperative to discuss these with your tax attorney at your initial meeting to give your attorney adequate time to develop a strategy for responding to the IRS inquiries, and defending your legal rights and the tax positions taken on your tax return.

IRS AUDIT RESOURCES

CONTACT US

If you have received an audit notification letter from the IRS, please contact us here or call 713.650.9700 to learn how our tax attorneys can help you respond to the IRS.

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