What Is an IRS Audit?
Individuals and businesses looking for an IRS audit defense lawyer in Lexington, Massachusetts can turn to Wakrim Law Firm for guidance throughout the IRS examination process. We help clients understand IRS notices and document requests, organize supporting records, communicate with the IRS when authorized, and evaluate available options when disagreements arise. Taxpayers also have important rights during an IRS examination, including rights related to representation and administrative appeal.
How Tax Returns May Be Selected for an IRS Audit
✓ Computer Screening and Statistical Selection :The IRS uses computerized screening and statistical methods to identify some returns for examination. Selection alone does not necessarily mean that a taxpayer made an error or violated the tax law.
✓ Information Matching :Differences between information reported on a tax return and information reported to the IRS by third parties, such as Forms W-2 or 1099, may lead to additional review or examination.
✓ Related Examinations :A return may also be selected when it involves transactions or issues connected to another taxpayer, business partner, investor, or entity whose return is under examination.
✓ Other Compliance Information : The IRS may consider other reliable information indicating potential reporting or compliance issues. The reason for selection and the scope of an examination depend on the circumstances of the particular return.
Types of IRS Audits
✓ Correspondence Audit :Some IRS examinations are conducted by mail. The IRS letter identifies the issues being reviewed and may request records supporting items reported on the tax return, such as income, expenses, deductions, or credits.
✓ Office Audit :An office audit involves an in-person meeting at an IRS office. The notice generally identifies the records and information the taxpayer should bring to the appointment.
✓ Field Audit : A field audit is generally conducted at the taxpayer’s home, place of business, or representative’s office and may involve a broader examination of financial records and tax issues.
Preparing for Your Audit Defense
Preparation begins with carefully reviewing the IRS notice to understand the tax years, issues, documents, and response deadlines involved. We help clients identify relevant records, organize supporting documentation, review the positions reported on the return, and prepare an appropriate response. The IRS generally requests specific records in writing, and taxpayers should preserve documents used to prepare their returns for the applicable retention period.
Representation Strategies
Our representation focuses on understanding the scope of the examination, presenting relevant documentation and legal positions clearly, and maintaining appropriate communication with the IRS. When authorized, counsel may communicate with the IRS on the taxpayer’s behalf and assist in responding to proposed adjustments. If a taxpayer disagrees with an IRS determination, we evaluate available administrative appeal or other review options and explain the applicable deadlines and procedures.
For official information about IRS audit procedures and taxpayer rights, visit the Internal Revenue Service (IRS).
Frequently Asked Questions
Q: What should I do when I receive an IRS audit notice?
Start by carefully reviewing the notice to identify the tax year, issues being examined, documents requested, and response deadline. Gather the relevant records and avoid ignoring the notice. You may respond yourself or obtain assistance from an authorized tax professional. If the issues are significant or unclear, legal or tax representation can help you understand the examination and prepare an appropriate response.
Q: Can I handle an audit myself?
Yes. Taxpayers are not required to hire an attorney simply because they are being audited. However, professional representation may be useful when an examination involves complex tax issues, substantial proposed adjustments, missing records, potential penalties, or disagreements with the IRS. Taxpayers have the right to retain an authorized representative during dealings with the IRS.
Q: Will the IRS publish my audit results?
IRS tax returns and return information are generally confidential and are not ordinarily made public simply because a taxpayer was audited. Federal law restricts disclosure of tax information, although specific statutory exceptions permit disclosure in certain circumstances.
Q: Do I need an attorney for a Massachusetts state audit?
Not necessarily. Massachusetts Department of Revenue audits are separate from IRS examinations, and taxpayers may respond to DOR inquiries without hiring an attorney. Professional representation may nevertheless be helpful when the audit involves complex state tax issues, significant proposed assessments, record disputes, or an appeal. We evaluate whether representation is appropriate based on the circumstances of the case.
Q: What is an Offer in Compromise?
An Offer in Compromise is an IRS program that may allow an eligible taxpayer to settle a federal tax debt for less than the full amount owed. It is not automatically available simply because a taxpayer cannot pay in full. The IRS evaluates the taxpayer’s individual facts and circumstances, including ability to pay, income, expenses, and asset equity, and may also consider situations involving financial hardship.
Speak With an IRS Audit Defense Attorney
If you have received an IRS audit notice or have questions about an ongoing examination, contact Wakrim Law Firm to discuss the issues involved, your response options, and possible next steps.