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Freedman & Grinshpun, PC
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Understanding tax audit defenses

| Apr 8, 2020 | Uncategorized

All those who file tax returns can be subject to a tax audit. Some tax audits are done randomly, but others are initiated after mistakes or possible instances of fraud are detected by the Internal Revenue Service (IRS) or the state.

If you are the owner of a business and you are subjected to a tax audit, you may choose to engage in a tax audit defense. This could help you deal with the process successfully and minimize stress.

What is a tax audit defense?

A tax audit defense is a service offered by tax professionals or lawyers with a specialty in business and tax law. It means that the business person will be represented, and the professional will help to manage the audit process so that the best possible outcome is obtained.

A tax audit representative’s main duties are to gather all information relating to the tax audit, communicate fully with the IRS, and to submit the appropriate documents.

What are the different types of tax audit defenses?

The needs of your business will depend on the stage of the audit that you are in and your situation. You should choose a tax audit defense based on your perceived risk of an audit, the size of your company and the resources you have. The following are the most common types of tax audit defenses.

Pre-paid audit representation

If you believe that a tax audit is likely, you may want to pre-pay for tax audit representation. In the same way that you would buy insurance, a pre-paid tax audit representation gives you peace of mind to know that you will have representation if your company is selected for an audit.

Independent tax audit representation

If you are subject to a tax audit and you have not pre-paid for representation, you may choose to pay for independent tax audit representation. This is likely to be more costly, but it can help you to go through the process smoothly and competently.

If you are interested in gaining tax audit representation, make sure that you understand how it could benefit your company. Taking swift action to gain tax audit representation could save you both time and money.