My primary goal in representing a business or individual under IRS audit is to guide that taxpayer to the most favorable result possible, given the unique facts and circumstances of the particular taxpayer under IRS audit and of the audit itself.
Part of achieving that goal is controlling the flow of information to the IRS and attempting to limit the scope and duration of the examination. Another component of working to achieve the best possible favorable result for each tax client is always being through and prepared and presenting the facts and the law to the IRS in an orderly and compelling manner.
Types of IRS Examination
There are three principal types of IRS audit or examination:
- Correspondence examinations,
- Field examinations, and
- Office audit.
Correspondence examinations are the most common type of IRS audit. Correspondence examinations are IRS audits that are conducted by mail. Typically, IRS correspondence examinations are fairly straightforward, involving at most only a few issues, and they are usually resolved simply by providing documents to the IRS that it is requesting from the taxpayer.
Field examinations are conducted by local IRS revenue agents. Field examinations are more involved than correspondence examinations. Typically, the most complicated tax issues are handled by IRS revenue agents in field examinations. With a field examination, the IRS revenue agent will seek a review of the books and records of the taxpayer and will often seek an interview or discussion with the taxpayer or the taxpayer’s authorized representative. Field examinations are more common for IRS audits of businesses than they are for audits of individuals.
Office audits are IRS examinations that are conducted at an IRS office. Office audits are handled by tax compliance officers rather than revenue agents. The issues involved in office audits are typically more complicated than those handled by a correspondence audit, but less complicated than issues raised in a field examination. The kinds of issues dealt with in an office audit are those in which facts are especially key to resolving the examination, such as entitlement to a dependency exemption, head of household filing status, and whether earned income was fully reported.
Taxpayer Rights During an IRS Audit
Taxpayers have a number of specific rights during an IRS audit, including:
- A right to an explanation of the audit process.
- The right that certain information be provided to the taxpayer when an IRS employee contacts them in any manner.
- A right to have the examination at a specified, reasonable time and place for the taxpayer and the taxpayer’s advisors.
- A right to representation, or to consult an authorized representative, during interviews by the IRS.
- A right to have communications to all tax practitioners who are authorized to represent the taxpayer before the IRS be held confidential.
- A right to be notified of the service of a summons on a third party and the opportunity to petition to quash the summons.
- The right to receive advance notice from the IRS of its intent to make third-party contacts, and, upon request, the right to receive a record of such third-party contacts on a periodic basis.
- A right to record any interview with the IRS.
- Freedom from repeat examinations.
- A right to present witnesses.
- The right to have an independent appeals function review the taxpayer’s case, including a prohibition of communications between appeals officers and other IRS employees, such as the revenue agent who handled the audit, without such communication also including the taxpayer or the taxpayer’s authorized representative.
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