If you are faced with an IRS audit you should seriously consider hiring an experienced tax attorney to represent you and pursue an effective strategy to obtain the best possible outcome. There are certain IRS policies and tax procedures that if argued appropriately could result in your audit being terminated before it ever gets started. Some of the things that an experienced tax attorney will consider:
IRS Policy To Avoid Repetitive Examinations
An initial consideration is whether the taxpayer’s audit violates the IRS’s policy against repetitive examinations. The policy against repetitive examinations applies when the taxpayer has been audited in the past two years, and the audits resulted in essentially no change. By showing that the requirements of the repetitive examinations policy are met, the audit can be resolved and closed at this very early stage.
IRS Policy To Avoid Reopening Examinations
The IRS generally does not reopen closed cases but this can occur in rare cases and under very limited circumstances. If the IRS tries to reopen a closed case, an experienced tax attorney would ensure that the IRS is following its own procedures and regulations regarding to reopening closed IRS examinations and seek to show that these own procedures and regulations when applied to your case do not warrant that the IRS audit be reopened.
Statutes of Limitation Applying to IRS Audits
Generally, the IRS can include returns filed within the last three years in an audit. However, there are provisions in the tax code that allow the IRS to expand an audit to include additional tax years if the examination reveals a need to look into the taxpayer’s tax situation in previous years. At the same time, this right of the IRS to examine additional years but be tempered by an opposing requirement that the examination of the taxpayer’s tax return be reasonable. Internal Revenue Code section 7605(b) states that only one inspection shall be made of a taxpayer’s books of account for each taxable year. IRC Sec. 7605(b) also provides that no taxpayer shall be subjected to unnecessary examinations or investigations of his or her tax liability.
Formulating an Audit Strategy
If the three rules above do not apply to your case and an IRS audit is going to take place, it is imperative to promptly devise a strategy for dealing with specifics of the examination and communicating with IRS personnel. An experienced tax attorney will initially evaluate your situation and identify any potential weaknesses or exposure points. With regard to exposure points and weaknesses, your tax lawyer would then develop a strategy for handling those sensitive and vulnerable aspects of your tax situation. From the taxpayer’s perspective, a realistic attitude and outlook must be established, including the consideration of possible settlement of the audit with the IRS at some point down the road. Your tax lawyer should also discuss the possibility of tax litigation and prepare potential issues with an eye toward eventual litigation in Tax Court. Often times the best results can be achieved at the appellate level, but only if the appellate officer believes that you will go to Tax Court if necessary to achieve the best result.
What should you do?
Tax problems are usually a serious matter and must be handled appropriately so it’s important to that you’ve hired the best lawyer for your particular situation. The tax attorneys at the Law Offices Of Jeffrey B. Kahn, P.C. located in Los Angeles, San Diego, San Francisco and elsewhere in California are highly skilled in handling tax matters and can effectively represent at all levels with the IRS and State Tax Agencies including criminal tax investigations and attempted prosecutions, undisclosed foreign bank accounts and other foreign assets, and unreported foreign income.
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