Audit Representation
Fortunately, most individuals and businesses file their tax returns and never hear from the Internal Revenue Service (IRS), South Carolina Department of Revenue (SCDOR), or North Carolina Department of Revenue (NCDOR). However, each day the taxing authorities contact businesses and individuals to initiate an examination of their tax returns; thus an official audit begins. If you or your business has been selected for an audit, you have a limited amount of time to respond to the Internal Revenue Service, South Carolina Department of Revenue, or North Carolina Department of Revenue. How you respond may make all the difference in the resolution of your audit.
As soon as you are notified that an audit is eminent, you may explore several resolution options. To protect yourself, you will want to be aware of potential pitfalls of some of these options.
First, you do not want to handle the audit yourself. Many people think that the Internal Revenue Service, South Carolina Department of Revenue, or North Carolina Department of Revenue will have the best interest of the taxpayer at heart and will guide the taxpayer through the process. Taxing authorities are in the business of collecting from taxpayers the maximum amount of money allowed by law. In order to protect your assets, you need a representative that knows the law and can speak for you.
Another risky choice is to rely solely on the person that prepared your tax return. While the return preparer should be involved in the auditing process, the taxpayer should retain independent counsel for representation. Usually, the return preparer deals with a large number of returns over a short time span. Mistakes are inevitable. When confronted with an error, the return preparer may be most interested in self-protection and may not be focused on your best interest. You need an independent representative to review the return, to offer you a knowledgeable assessment and to resolve the situation on your behalf.
An Enrolled Agent is authorized to represent taxpayers before the Internal Revenue Service. Enrolled Agents must take and pass an examination. Many, but not all, Enrolled Agents are former Internal Revenue Service employees that have retired from public service but want to continue working. An Enrolled Agent will not be able to handle the audit past the administrative stages. There is no confidentiality protection for conversations and information passed between a taxpayer and an Enrolled Agent.
A Certified Public Accountant is also authorized to represent taxpayers before the Internal Revenue Service. CPAs must take and pass a series of examinations and also have education and experience requirements. A CPA can address your audit but may not have full knowledge of the tax laws and procedures that can work to your advantage. There is limited confidentiality protection for conversations and information passed between a taxpayer and a CPA.
A properly licensed attorney is authorized to represent taxpayers before the Internal Revenue Service, South Carolina Department of Revenue, and North Carolina Department of Revenue. Attorneys must take and pass an exam and also have education requirements. In order for an attorney to expertly handle your audit, experience and knowledge of the tax laws is essential. An attorney that practices law in the area of taxation is commonly referred to as a tax attorney or tax lawyer. Tax attorneys usually have an advanced law degree (LL.M.) in taxation. If necessary, tax attorneys have the expertise to handle your audit past the administrative stages and into court. Tax attorneys have the broadest confidentiality protections of all tax practitioners.
While tax attorneys are best suited to represent the audited taxpayer, it is important for the taxpayer to know that there are different types of tax attorneys or tax lawyers. Most tax attorneys provide legal advice on how to efficiently structure your affairs to avoid or minimize taxes in the first place. These tax attorneys are often referred to as tax planning or estate planning attorneys. Another type of tax attorney is the tax controversy or tax litigation attorney. These tax lawyers limit their practice to representing clients before the Internal Revenue Service or state taxing authorities. Tax controversy lawyers not only represent taxpayers during the administrative audit and appeal, they are ready to represent the taxpayer in court proceedings against the Internal Revenue Service, such as in the United States Tax Court, the United States District Court, and the Court of Federal Claims. When a taxpayer is being audited by the South Carolina Department of Revenue, a tax litigation attorney can represent the taxpayer in the South Carolina Administrative Law Court. When a taxpayer is being audited by the North Carolina Department of Revenue, a tax litigation attorney can represent the taxpayer in the North Carolina Office of Administrative Hearings.
In conclusion, the best choice for most taxpayers is to consult with a tax controversy lawyer to determine the best way to respond to the Internal Revenue Service, South Carolina Department of Revenue, or North Carolina Department of Revenue. The tax controversy lawyer has the ability to handle your audit from start to finish and provides the best confidentiality protections available to taxpayers.
Our Firm understands that dealing with the Internal Revenue Service, South Carolina Department of Revenue, and North Carolina Department of Revenue can be a very time consuming, frustrating, and extremely stressful experience. Give us the opportunity to take that stress off your shoulders and give you assurance of knowing that your tax issue is getting the independent, professional attention that it deserves.
Call our toll free number (877) 315-8370 or visit our Virtual Law Office to request a free, no obligation personalized quote for our Audit Representation service.