Frequently Asked Questions Regarding Audit and Tax Court representation.

Having more than two decades of experience of Audit and Tax Court representation, here are the most common questions and concerns of taxpayers inquiring about this process.

1. I received an IRS Notice informing you that your return has been selected for examination. What should I do?

The fact that your return has been selected for examination, it does not mean or imply that that you have made an error or done something dishonest. Tax returns are selected for audit in a variety of ways including random sampling. The most important thing is not to panic and instead to reach out to a tax attorney for representation. Provide us with your audit letter and the subject tax returns so we may review your situation.

2. Why should I be concerned if an audit is poorly conducted?

A poorly conducted audit can result in large additional tax adjustments and penalties and interest up to as much as 100% of the adjustment. Most local tax preparers are not equipped to represent you in an audit before the IRS. Because we focus on tax representation, we can make sure that your audit is efficiently and effectively handled and attempt to pursue an audit result with little or no additional tax assessments. We can handle everything from simply submitting missing tax documents to representing you in front of an IRS examiner. Let us do the work for you.

3. How is using a tax attorney beneficial during an audit?

Using a tax attorney to help with an audit can significantly increase your chances of getting a better outcome. Many times individuals don’t realize that audits can go both ways, you may actually end up being owed money after an audit. A tax attorney can analyze your situation and find the best approach to take in order to get the best outcome. The IRS actually prefers working with professional tax representatives because it makes their job easier and helps the process move along more efficiently, which can actually result in a more favorable decision.

4. What does your firm do for an audit representation?

Upon filing a Power Of Attorney Form with the IRS or State Tax Agency, we become the primary contact for the tax agency. You will still receive copies of all correspondence sent out by the tax agencies but you will not be receiving any calls or visits from the agent(s). In connection with the audit we will research any issues that are likely to come up, respond to the agent's arguments by coming up with answers on your behalf, meet with the agent in person if required on your behalf, negotiate and settle taxes owed if you end up owing more money during the audit and cannot pay, and handle any unforeseen issues that may arise during the audit.

5. Why would I not want my original tax preparer to represent me in my appeal (or in my audit)?

One of the most effective defenses to the imposition of penalties and the associated interest on the penalties available to Tax Counsel, is to argue that the taxpayer relied on a tax professional in the preparation of the return at issue. This creates a potential conflict of interest between you and your original tax preparer where your interest is to protect yourself financially and your original tax preparer's motivation may be to protect his reputation with the IRS. It therefore becomes highly unlikely that even where appropriate to do so, your original tax preparer will throw himself under the bus by admitting his errors in preparing the returns at issue for your financial benefit to his possible detriment with the IRS including the possibility of preparer penalties and detriment to his professional reputation with the IRS. No such conflict exists where you engage Tax Counsel that did not prepare the returns at issue to prosecute your Appeal.

6. How many years worth of returns are at risk during an audit?

Ordinarily, the IRS has three years from a tax return's due date or filing date, whichever is later. However, this limitation does not apply when there is an allegation of fraud, when no return was filed, or when the taxpayer is charged with a substantial omission or concealment of items of gross income. Because an audit conducted for one tax year can trigger other tax years and can result in scrutiny of other tax deductions not originally stated in the audit letter, you should take this matter seriously and engage an experienced tax attorney to represent you.

7. What will happen if I do not respond to the taxing authorities audit notice?

Because the taxpayer has the burden of proof to prove claimed deductions, failure to respond to an audit notice usually results in the denial of these deductions leading to the charge of additional taxes along with interest and penalties. If left unchecked, an ignored audit notice and failure to pursue any appeal will result in a final assessment. Once an assessment becomes final, the IRS will start the collection process action that can eventually lead to wage garnishments, liens, levies and seizure of property.

8. What is the worst that can happen if I choose to represent myself in an audit?

Tax agents are aggressive by nature and left unchecked could potentially reach a determination that is unreasonable and inconsistent with the applicable facts and circumstances of your case or their determination may be based on erroneous applications of law. An experienced tax attorney will be able counter a tax agent's aggressive nature, deal with the complex technical issues that arise during an audit and be an advocate on your behalf as to any factual or legal issues that arise during the examination.

9. What is a Notice Of Deficiency?

A Notice Of Deficiency is a letter from the IRS proposing additional taxes and usually penalties against the taxpayer. You have two methods to contest this Notice Of Deficiency:

(1) File a petition for redetermination of the deficiency with the U.S. Tax Court, or

(2) Pay the liability stated in the deficiency notice and file a suit for refund in the Court Of Federal Claims or a Federal District Court.

To assure that you do not loose significant legal rights, claims and defenses, you should secure our services as soon as possible to pursue the best course of action.

10. What happens if I do not respond to a Notice Of Deficiency within the required 90 days?

If you do not file a petition in Tax Court within 90 days of the date appearing on this notice, the proposed tax changes, interest, and penalties become assessed and owed. It does not matter that the IRS was incorrect in proposing the assessment. Don't waive your right to appeal. You should contact us as early in the 90-day period as possible to ensure your best chances of a successful Appeal.

11. What experience does the Law Offices of Jeffrey B. Kahn, P.C. have in handling audits and Tax Court cases?

We have found that the IRS and State tax agents working these cases have made errors that favor the IRS. These errors include misinterpreting documents, misapplication of the tax laws, and failure to abate penalties. Let our experience work for you to get your audit underway without the stress of handling it on your own.

12. Will the Law Offices Of Jeffrey B. Kahn, P.C. handle your audit and tax court representation in an efficient and expedient manner?

We will act as your advocate and effectively work your case. We have helped many taxpayers not only in California. Let us have the opportunity to help you.

13. I have more questions. How can I contact you?

For prompt evaluation of your case, we encourage you to contact us using our toll-free number at 866.494.6829. or send us an email for your free and confidential analysis.

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