As IRS audit rates have gone up, individuals and small businesses have been increasingly targeted. Those selected for an audit have the right to representation if they choose to use the services of a tax defense firm.
The question is: Is it worth the cost? Let’s look at some reasons why a full audit representation plan may be worth it.
Professional Guidance
Whether the IRS is auditing you or simply has questions about your tax return, getting a professional on your side can be worth it. Many CPAs and accounting firms offer audit representation. There are also specific companies that specialize in this service. These providers can help with everything from preparing your documents to meeting with the IRS on your behalf. They will be able to explain the process and determine what steps need to be taken next.
The cost of audit representation varies depending on the level of service and how complex your case is. Some providers charge hourly, while others have a flat fee. The cost of representation will also vary based on how much you owe in back taxes and whether you want to pay your representative with an installment agreement. You may also wish to hire a legal advisor, which will be more expensive.
A prepaid audit defense service is an option that allows you to have a representative hired before you receive notification of an IRS examination. This is a great way to avoid the stress of hiring a representative after being notified that you are being audited. This type of service can be found online and through a number of different tax relief services.
If you choose this type of service, be sure to choose a provider with a good reputation and a high customer satisfaction rating. It is important to understand the type of service you are paying for and that the company you are using is qualified to handle your case.
In addition, it is important to consider how many years you want the representatives to defend you. The IRS often audits multiple years, and if they find you owe more than you did for one year, they will then apply those new amounts to all of the other years. This can result in massive fines that can quickly add up. The best way to avoid this is by having a representative that can defend you for all of the years you are being examined for.
Less Stress
When you hire a professional representative, they will take on the task of representing your interests with the IRS. They will be able to complete numerous tasks on your behalf, including reviewing your records, preparing documents, and meeting with representatives from the IRS. This will greatly reduce the stress of going through an audit, as you’ll have someone on your side who can handle all aspects of the process.
The interview data from this study indicates that the type of stress experienced by audit team members depends on the environment, the expectations and goals set for the work, and the individual’s own situation. This is supported by previous research which has found that a task’s perceived difficulty is a significant predictor of intention to behave in a particular way.
In this case, the interview data suggest that a common factor that triggers audit team stress is the uncertainty of the new engagement. One participant from Team 1 commented, ‘If it’s not clear when you start on a project you don’t know what to expect, and that’s why people get stressed.’
Another important factor that impacts audit team stress is the perception of workloads. This is consistent with previous research which has shown that increased workloads can lead to feelings of stress and decreased productivity.
Finally, the interview data suggest that insufficient communication and cooperation amongst audit team members can also cause stress. This is because the lack of teamwork can result in an inaccurate understanding of the work and lead to low-quality judgments that may reduce audit quality.
The data from this study also showed that clear planning can significantly reduce auditory stress. The interviewee from Team 2 explained that the clarity of planning in this experience was a key factor in their successful outcome. Inter-team stressors include pressures that occur between team members, such as conflict and disagreement over audit decisions that concern the team.
Timely Representation
If the IRS sends you a notice or letter that you are being audited, a Tax Professional will immediately be assigned to your case and work with you through every step of the process. They will help you defend your state and federal income tax returns, explain your options and their developed strategy, and work to minimize your financial impact. They will also set up an appointment with the IRS to meet and discuss your case and any documents they request and negotiate deadlines.
An experienced representative can quickly determine what the IRS is looking for and develop a strong defensive position based on how you fell behind, any life circumstances that could help your case, and other factors. They can help you navigate the audit process from start to finish, saving time and money compared to doing it on your own.
They will not only help you during the audit process but can also prevent future audits by reviewing your tax return and identifying areas where you may have missed out on deductions or incorrectly reported income. This helps you avoid large penalties for missing out on money, so hiring a representative is well worth the cost.
If you do end up owing more in taxes, the tax professionals at Brotman Law can initiate an appeals process to reduce your debt or even waive any penalties. They know the people who work for the IRS, and they can use this knowledge to your advantage to get a better deal for you than you would have otherwise gotten.
Many companies offer IRS audit representation services, so be sure to research to find one that is reputable and affordable. Some will charge by the hour, while others will have a flat fee. Also, be aware that your tax professional’s experience, training, and geographical location will all affect their fees. For example, an enrolled agent in Florida is going to have a lower fee than a CPA or tax attorney in New York.
Expert Advice
Having professional representation from EAs, CPAs, or tax lawyers can give you peace of mind knowing that they’ll work to ensure you receive the biggest refund possible and pay no more than you owe. They can also spot deductions you may not have known about, saving you money even if the IRS decides you do need to pay additional taxes. They’ll also be able to explain the tax code to you and help you understand it so that you’re less likely to get taken advantage of by the IRS during an audit.
While it’s true that most people who use TurboTax don’t get audited, it’s important to remember that you can never be too careful when it comes to filing your taxes. If you have a complex financial situation or have invested significant amounts of money, it’s worth the extra $59 to have professional guidance if you’re ever called into question by the IRS.
In addition to being a great way to ensure you have the right representation, prepaid audit defense can save you money in the long run. You can’t get a prepaid representation after the IRS tells you you’re being audited, so buying this protection before you file your return is important.
If you’re a TurboTax customer, there are several options for prepaid audit defense. For example, with the MAX Benefits package, you can get full audit representation by an enrolled agent at no extra cost. You’ll also have access to a dedicated customer service team who will guide you through the entire process.
The cost of prepaid audit defense depends on the company you choose, but it’s typically more affordable than hiring an accountant to represent you during an IRS audit. Many accounting firms, tax relief companies, and even law firms offer this service, and some charge an hourly rate while others charge a flat fee.
The MAX Benefits package also includes a complimentary membership to TaxAudit, which provides expert representation in IRS and state income tax return audits for one low pre-paid fee. The service excludes tax returns for which you are under criminal investigation (CI), property tax, sales tax, and city/local or county business tax. It also doesn’t include compliance audits for pension and profit-sharing plans.
