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Tax Audit Help – Preparation is Key

By Justin Moyer, North Carolina Tax Controversy Attorney

The best way to resolve a tax audit is to be prepared. Preparation is key for both IRS and North Carolina Department of Revenue tax audits. All items under audit must be substantiated and proven in a clear and concise manner. Do not attempt to go at this alone – hiring the right tax audit help makes all the difference.

How should I prepare for an IRS audit?

Some taxpayers mistakenly believe that disorganized books and records will cause the IRS to give up on the audit. Nothing could be further from the truth. Auditors are highly trained and will not be stopped by insufficient or non-existent records. In many cases, the IRS will draw unfavorable conclusions against the taxpayer and assess a larger tax liability. This strategy then shifts the burden of proof onto the taxpayer to piece together documents and records to disprove the IRS’ claims. This is a very labor-intensive process and will require diligent work from the team hired to provide tax audit help.

Build Your Tax Audit Help Team

 It is essential to seek out tax audit help from an experienced tax controversy attorney as soon as possible when preparing for an audit.  It is better to hire tax audit help from an attorney who is bound by attorney-client privilege then to go back to your CPA or tax preparer. Anything that you discuss or disclose to the tax professional is not protected in the same manner as the information discussed with a tax attorney.

What this means is that if the tax preparer or accountant is subpoenaed in a subsequent criminal tax proceeding, they may be compelled to reveal information that you admitted to during those conversations. Only the attorney-client privilege and the attorney work product rule can protect the disclosures you make in the course of seeking tax audit help. If assistance is needed by a CPA, your tax attorney can bring them in as a consultant. That strategy will then allow the derivative attorney-client privilege. The skill set of a tax controversy attorney will be more appropriate and more effective during an audit than the skill set of an accountant.

Get Your Documents in Place

In getting prepared for the audit, now that you have an attorney on board, you will need to collect and provide documentation to support in-depth answers to the questions asked in the audit letter. If you do not have documents to prove any of these items you may have to reconstruct them from third parties or other records. If a third-party can attest to an undocumented item, you may be able to use such techniques as preparing and submitting an affidavit. You will need to show documentation of all income received and that any deductions and credits used on the return were correct. 

Be Cooperative and Timely

It is highly recommended to be polite, cooperative and responsive to the taxing authority conducting the audit so that there are no unintentional misunderstandings. Pay close attention to all deadlines and make every effort to meet them. 

Know Your Rights

The IRS and the North Carolina Department of Revenue are required to provide you with fair treatment during the audit process. You have the following rights:

– a right to professional and courteous treatment by IRS employees,

– a right to privacy and confidentiality,

– a right to know how the information the IRS obtains will be used,

– a right to be represented by the tax audit help professional of your choice, and

– a right to appeal.

Facing an audit is very serious. Based on the type of error discovered, you could face a penalty of up to 25% of the deficiency and for severe cases there is the possibility of prison time. Another reason why it is so important to work with the tax controversy attorney from the outset is the fact that that you could face an audit by both the IRS and the NCDOR, as well as other government agencies.

If you are facing a tax audit, quickly hiring a tax controversy attorney to assess your situation and help you navigate the audit is crucial. You may have underlying tax problems or mistakes that may be discovered, and you will need strategic guidance more than ever. At Murray Moyer, PLLC, the tax attorneys and tax professionals will work hard to guide you through this process and provide you with unmatched tax audit help. Contact our offices today for a consultation.