Understanding tax audit defenses

With the year coming to an end, it will soon be time to submit your 2017 tax returns.  Everyone who is eligible must pay taxes, and everyone who pays taxes is eligible for a tax audit. That means that no matter how carefully you have prepared your returns, you could still be subject to a dreaded audit.

Tax audits are not necessarily bad things, but they can be tedious and intimidating. If you are selected for an audit, you will want to know about the possible defenses that you can use during the process

A tax audit defense means that your attorney or another tax professional will assist you through the audit process and defend you from potential penalties. A tax audit defense is sometimes also referred to as tax audit representation, because your lawyer or tax professional will represent your interests during the audit. Tax audit defense can’t prevent an audit, it just helps the process go faster and lowers the risk of penalties.

There are two major types of tax audit defenses:

A pre-paid audit representation is a service that you can purchase before you submit your tax return. For a small fee, you will be guaranteed representation if your return is selected for an audit. The downside is that you must pay the fee even if your return is not audited.

Independent tax audit representation is when you hire professional assistance because you did not purchase pre-paid representation. This tends to be the more expensive option.

You will want the person representing you to be qualified, professional and experienced. To represent a taxpayer during an audit, someone must be:

  • A Licensed attorney
  • A certified public accountant
  • An enrolled tax agent

Generally, the attorney or professional who is representing you will act as a go-between for you and the IRS, gather any relevant information about your taxes, attend any meetings pertaining to the audit and help submit and complete any requisite paperwork.

If you are a taxpayer who faces serious penalties or even criminal charges related to your tax returns, hiring a tax professional–particularly an attorney–could be the right step for you.