The Role of a DC Attorney During an IRS Audit

An attorney brings tax law expertise to an IRS audit in an attempt to resolve it in a timelier fashion, and give you a more favorable result than if you tried to handle it on your own. A taxpayer should contact an attorney before responding to the IRS. That first contact from the government may seem innocuous, but you never know what the IRS agent is thinking or investigating, and you might accidentally over-share information early in the audit. The role of a DC attorney during an IRS audit is to assess your current situation and offer guidance on how to resolve it.

What is “Scope Creep” in Tax Audits?

The taxpayer should consider the possibility of audit scope creeps, where the IRS starts an audit on one area of concern, and as the taxpayer provides information, the agent increases the scope of the audit to include other areas of concern they discover. If you are concerned about the audit and what they may find about other years of tax returns, an attorney can help keep the investigatory scope as narrow as possible.

Important Information for Handling IRS Audits

Strong communication is important, so an attorney needs to know everything involved with the tax return, including relevant books and records. Additionally, it is good for legal counsel to be aware of issues outside the scope of the filed tax return, because it can create problems down the line if there are other items out there that should have been reported but were not.

While responding to information requests during an audit, an experienced DC attorney will help decide how much detail or lack of detail should be given when responding to the IRS. Sometimes over-sharing with the IRS can give rise to more questions and make it more likely they expand the scope to other areas of the return or other years. On the other hand, not giving enough information can lead to problems as well. We can help you walk this fine line to resolve an audit as quickly and efficiently as possible.

Common Audit Mistakes When Working Without an Attorney

Failing to timely respond to the IRS deadlines can be costly, and providing documents and evidence that they did not request can lead to a wider audit scope.

Arguing an unsustainable position is wrong, whether or not the taxpayer knows their position is wrong. If an independent third party is not there to inform them of their incorrect assertions, it can lead to the taxpayer spending resources on a losing position.

Arguing with the IRS agent personally is also a major mistake. IRS agents are frequently overworked and not looking to punish taxpayers personally. Their job is to make sure the tax return was done correctly. If a taxpayer is rude and yells at them, the agent may not give them the benefit of the doubt in a toss-up situation.

Tax Lawyer vs. Tax Preparer or Accountant

Some tax preparers and accountants have experience working with the IRS during an audit, but not all of them. Also, some tax preparers may take the audit personally, since they were the ones who prepare the return. At the end of the day, the taxpayer is the one who is responsible for the information on the return, and their interests should be represented independently when dealing with the IRS. Therefore, we advise not having a tax preparer or accountant be the point of contact during an audit. In addition, preparers and accountants do not have the benefit of attorney-client privilege.

The IRS has the right to contact third-parties with relevant information related to the audit and tax return, the tax preparer, bookkeeper, and people in similar roles. The attorney typically cannot act as an intermediary in those situations when the IRS is reaching out directly to the third party. However, if the IRS is reaching out to the taxpayer for information, and the taxpayer needs to go to a third party for that information, then the attorney can act as an intermediary.

Learn How a DC Lawyer Plays a Key Role When You Are Audited by the IRS

The cost of an attorney will depend on the complexity of the audit. At Pontius Tax Law, we require the payment of legal fees in the form of a retainer, and we bill by the hour. We put the client’s interests first and work efficiently and effectively to resolve their case for a competitive fee.