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When dealing with an IRS audit, should I hire an accountant or a tax lawyer?

Salt Lake City, UT |

I'm being audited. I presume I shouldn't rely on dealing with this myself.

Attorney Answers 6

Posted

It depends. If you've been using a particular accountant up until now and this accountant is very familiar with your situation, you may want to stick with that person throughout the audit. Keep in mind that the accountant must be a licensed CPA, otherwise the IRS will not permit him/her to represent you even over the phone (with some exceptions). Your situation also depends on whether you plan on fighting the audit all the way to Tax Court. If so, then you will have to go with a licensed attorney as the US Tax Court will not permit a CPA to sit at the same table as you much less represent you.

With respect to dealing with this yourself, I would weigh the costs of hiring out an attorney vs. how much you would have to pay if you lost the audit. If the two numbers are roughly the same, then you may want to give it a try yourself. Lastly, consider whether the audit will affect more than just one year. For example, suppose you took a deduction for spousal support in 2009, 2010 and 2011. Now you're being audited for 2009 spousal support deduction. If you lost the 2009 audit, will 2010 and 2011 also be lost? Just something to consider. Hope this helps. Good luck.

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Posted

Mr. Tarnavsky provides sound advice. Something else to consider is the likelihood of success. You will probably have a greater chance of success with an attorney or CPA. Also, many tax attorneys will give you a free consult, so you may want to at least look into that.

The biggest danger in trying to do this yourself is providing too much information or not knowing possible strategies to lower your overall liability.

This answer does not establish an attorney-client relationship, Moreover, this attorney is Licensed to practiced law ONLY in LOUISIANA and answers to questions from other jurisdictions or states are meant to provide only general information. Users should contact a local attorney in their jurisdiction or state.

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Posted

Assuming a large enough of a dollar amount is at stake, I wouldn't go into an audit without the help of someone who handles this for a living. And that is a rule I would personally follow, even though I'm an attorney.

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Posted

You're correct - you someone besides yourself to represent you in the audit.. CPA's, Attorneys and Enrolled Agents are all able to represent you to the IRS. What's key in choosing who it is revolves around experience, ability to handle both the financial and legal issues and someone you feel comfortable with. In our experience, cost is not generally that different between the three (unlike ours, some tax firms do charge substantially more so get quotes first) but be careful not to go with the lowest hourly cost. Experience will definitely help in this process.

Good luck.

Evan A. Nielsen
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Evan A. Nielsen is licensed to practice law in California. The information provided here is for educational purposes only and is not intended as legal advice for a particular matter. This response does not create any attorney-client relationship with the author. For specific advice about your particular situation, please consult an attorney.

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Posted

Another very important advantage to hiring a CPA or an Attorney, is that they will be able to talk directly with the IRS for you. Taxpayers, and anyone else, tend to talk too much and create more problems for themselves from self admissions they did not realize they were saying.. A good rep won't let you talk, unless necessary.

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Posted

There are a number of issues that determine whether you want a CPA, tax attorney, or enrolled agent representing you. One of the initial issues is whether it is LIFE (limited issue focused examination) or general audit. If it is a LIFE audit then you need someone with expertise that has routinely handled that issue across the country with a variety of different revenue agents so they know what tactics work and do not work. General audits are much more clumsy on the IRS side so you don't necessarily always need to use a bazooka on a mosquito. It also depends on your level of education and experience, especially if there are landmines hidden on your return, such as FBAR violations. If it is simple "do these receipts match those numbers on the return" then you don't need a tax attorney, your ordinary CPA who set up shop in a strip mall can more than adequately represent your interests.

If there are more complex issues wound up with your tax history and compliance, a tax attorney or enrolled agent is better suited to play the long game, strategize, and stack the deck in your favor as much as the facts will allow.

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