Lawrence Lawler: Hi! My name is Lawrence Lawler. I am the National Director of the American Society of Tax Problem Solvers. This series is on how to prepare for an IRS audit. The topic today is going to be how to get professional help and when you should seek such professional help.
First of all, you need to know who can represent you. The only individuals who are able to represent a taxpayer before the IRS are those that have a Power of Attorney and who are either an attorney, a CPA or an enrolled agent. Those three credentials any one of them allows an individual to represent someone else before the IRS. The first reason that you might want to have a representative at the audit rather than yourself is because you might want timed answered questions. You don't want to be under the pressure of you've been asked and now you as the taxpayer feel that you must respond right now on the spot without even thinking about your answer.
If your representative is there and they are not really sure what the IRS is getting at or what their of their question is, they can take time by saying, I'll get back to you after I talk to my taxpayer about that issue and we'll have an answer for you very quickly. Very often, the IRS will request to interview the taxpayer. First of all, you are not required to attend the audit at all, unless the IRS were to issue a subpoena. Of course, if they do that, you realize that the case is more severe than you thought to begin with.
But generally speaking, you are not required to attend an audit. Now, the IRS may want to do an interview with you and you can do that accompanied by your representative and insist on the representative being there and the representative should be able to tell you what types of questions to answer and help you answer them correctly. You can do that to be cooperative with the IRS if you wish. But unless, they issue a subpoena, you really do not need to do that. They are only going to issue a subpoena in a severe case.
But sometimes the representative will tell you, you explain your situation even better than they can and they might let you have a meeting with the auditor. But they wouldn't leave you with the auditor alone or for any extended periods of time. Generally, it will be restricted to just one meeting.
Many times there's a question comes up as to whether or not the representative should be the original prepare of the tax return. We find that that is often a problem because if there is something wrong on the tax return, if some might needs to be changed, if something is going to be disallowed, it may be a situation where you can avoid penalties or you can get a little more consideration out of the IRS, if in fact, you are willing just throw the original prepare under the bus.
I don't know anything about taxes; I only follow the advice that was given to me. I drop off my information and he prepares my tax return, he asks me any questions he wants and I answer them. But I don't understand taxes at all and that's the way the conversation goes with many taxpayers. So the bottom line is if your original prepare is the one sitting there, he is not going to allow you to answer questions that way. However, an independent third-party representative, a different CPA enrolled agent or attorney is very willing to say look, the taxpayer didn't know better, they aren't tax sophisticated or we've got some changes to make but I think we should be able to discuss waiving the penalties because it was unintentional. So it may save you some penalties and interest, it may even get you some deductions that are allowed that wouldn't be otherwise. So you understand now why you would be well advised to hire a representative to represent you before the IRS and why it might be a less costly way to go about doing it because if the wrong person is there who is not qualified and doesn't understand what's going on, the audit is going to be extended and expanded, it might even go into other years. This is going to be more costly than hiring someone who is professional of doing this.
Obviously, you always want to look for a representative who is a professional of doing this and that's where the American Society of Tax Problem Solvers comes in. If you don't know someone who specializes in taxpayer representation, you can always contact the American Society of Tax Problem Solvers. The next area we are going to cover is disagreeing with the IRS.