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When the IRS opts to do a deeper dive into someone’s tax returns, it’s called an audit. They might do this if it seems the taxpayer is claiming too many deductions or charitable contributions, or if they suspect some income isn’t being reported.
Either way, a tax audit is a serious undertaking, and if you’re subject to one, you’ll want help in your corner. Here’s what you need to know about tax audit representation and where to find it.
On this page:
- What is tax audit representation?
- What does an IRS tax representative do?
- How to decide if you need help with an IRS audit
- How much does IRS tax audit representation cost?
- 3 companies that offer IRS audit representation
What is tax audit representation?
Tax audit representation is essentially a form of defense for taxpayers facing an audit. It’s usually offered by tax professionals, tax attorneys, or tax relief companies.
Once hired, the professional becomes the taxpayer’s authorized audit representative. They can help communicate with the IRS, accompany the taxpayer to any meetings, or stand-in for the taxpayer entirely.
What does an IRS tax representative do?
An IRS tax representative is there to help with all aspects of the audit. First, they’ll assess the situation and review your tax returns. Then, they’ll develop a strategy for defending you.
They also may:
- Attend any in-person audit meetings with the IRS
- Accompany you to any IRS interviews
- Prepare any documents requested during the audit
- Handle communications with the IRS agent
- Appeal the results of your audit, if you disagree with their findings
The primary benefit of tax audit representation is that you get guidance from an experienced professional. For most people, audits are very stressful and intimidating. A tax representative can help you better understand the auditing process, ensure you’re prepared, and help you minimize any damage that might come of it.
How to decide if you need help with an IRS audit
There are three types of audits: mail audits, office audits, and field audits. Mail audits are the simplest type. The IRS will mail you a letter and request additional documentation to verify your returns. Unless the document requests are complicated, you probably won’t need representation for this type of audit.
Office and field audits, though, are done in-person and are a bit more serious. With an office audit, you’ll be called to a local IRS field office; field audits are conducted at your home or place of business. You’ll be questioned by an IRS agent in both cases, and you’ll probably want a representative to help you through it.
When you should consider representation:
- You’re facing an office audit
- You’re facing a field audit
- You don’t have some of the documents requested
- You’re meeting with an IRS agent in person
When you can forgo representation:
- It’s a simple, mailed audit
- You have all the documents requested
The decision to hire tax audit representation is entirely up to you. If you’d feel more comfortable with professional help — even with a mailed audit — feel free to do so.
How much does IRS tax audit representation cost?
IRS tax audit representation costs vary and can come with either an hourly rate or flat fee. If your representative charges hourly, you can expect to pay around $150 per hour or more. Flat-fee services can be anywhere from $1,700 to $5,000, depending on what type of audit you’re facing.
After conducting your audit, the IRS may find that you owe additional taxes. You will also owe interest on those unpaid taxes, and if you fail to pay the full amount owed within two weeks, you’ll also get hit with penalty fees (0.5% of the balance every month).
If there’s a possibility the IRS could determine you owe thousands more in taxes, the cost of representation may be worth it.
3 companies that offer IRS audit representation
Many accountants, tax firms, and tax law groups offer IRS audit representation. There are also specific tax relief companies that specialize in these sorts of services. These companies typically offer a free consultation to help determine whether you need representation.
Here are three popular companies to consider.
Anthem Tax Services
Minimum Tax Debt
Anthem offers a variety of tax services, including tax preparation, bookkeeping, and audit representation. The company employs IRS enrolled agents and has an A- with the Better Business Bureau. Past customer reviews are generally positive, with 4-plus stars on BBB and 4.3 stars on Trustpilot.
Minimum Tax Debt
Tax audit representation is just one of the many tax-related services offered by Community Tax. The company has more than a decade of experience. It employs a variety of tax professionals, IRS enrolled agents, and attorneys. Community Tax currently has an A+ rating with the Better Business Bureau and 4.6 stars on Trustpilot.
Optima Tax Relief
Minimum Tax Debt
Founded in 2011, Optima specializes in tax problems, including audits, back taxes, unfiled returns, and more. In 2015, the company was No. 3 on the Inc. 5000 list, and it currently has an A+ rating with the Better Business Bureau. Customers have given Optima 4.6 stars on Trustpilot.
The bottom line
If you’re facing an IRS tax audit, representation can give you peace of mind and minimize any penalties you might face in the process. If you do consider hiring IRS audit help, make sure you shop around and compare your options. Experience, fees, and expertise can vary greatly. Use our guide to the best tax relief companies to get you started.
Author: Aly Yale