Dana S. Beane & Company, PLLC for over 50 years has been battling the IRS for our clients. For an interesting story about where our passion came from see our founders short form biography.
In general, the IRS only audit businesses, their owners and estates. If you are not in the top 5% of incomes, you don't have much to worry about. For the rest of you, big brother is waiting and watching.
If you are audited - Here are our recommendations:
1. Number one biggest mistake, representing oneself.
2. Be prepared - The IRS is not a mystery, depending upon your fact pattern it is normally very clear exactly why they are auditing you. If it is not clear to you, have a taxation expert review your returns and inform you of the red flags it contains. Prepare, prepare and prepare.
3. If you are a business, read the IRS's industry audit guide line manuals,
its likely the examiner you will be deal with knows them, accordingly, you
4. Treat your examiner with the same courtesy you would like others to treat you. There is nothing worse than an angry examiner.
5. The government is a very big place and some times you will come across an examiner who does not know the rules. For example, he or she should always advise you that you have a right to representation. Our advise is simple; tell the examiner you would like a CPA, Attorney or Enrolled Agent to represent you!
6. In our firm, IRS notices are wrong nine times out of ten. Don't assume
the IRS is right! It can be very costly to get your money back.
Form 2848 (PDF 51KB) - Power of Attorney is utilized by the IRS. In general, it is a power that permits the designated representative to act on behalf of the taxpayer. It is not a power to conduct your affairs, just tax business.
Form 8821 (PDF 45KB) - Tax Information Authorization is an alternative to a POA wherein the taxpayer authorizes the IRS to release confidential information to the representative only.
To revoke these powers simply mail the IRS offices in which you deal a copy of the original Form with the word "REVOKED" at the top with your signature and date.
Taxpayers can recover certain costs from the IRS
Providing the follow are satisfied, IRC Section 7430 permits an award of fees and costs:
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