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What are the benefits of having legal representation for an IRS audit?

On Behalf of | Sep 21, 2021 | Audits |

The tax audit is one of most dreaded occurrences for any individual of wealth. While the IRS occasionally conducts audits at random, most audits are focused on people in higher income brackets.

More aggressive tax audits of the wealthy

In fact, it appears that Democrats in the House of Representatives are planning to increase taxes and to dramatically increase their auditing of the wealth. Business Insider online as well as Texas New Report online explain that the House Democrats are looking to raise tax revue by both raising taxes and by increasing their efforts to uncover tax discrepancies and fraud through more aggressive auditing of the wealthy.

While you shouldn’t live in constant dread of being audited, it is important to be prepared.

4 ways legal representation can help you during a tax audit

One of the most important things you can do is to take preemptive action by having an experienced tax lawyer look over your financial records with you and help you decrease the chances of being audited and to be prepared if you are.

If you have already received a letter that you will be audited, it is even more critical to contact a lawyer right away. While you might be tempted to simply talk with your CPA or some other tax expert, there are some important benefits of working with a lawyer:

  • Avoid the interview: The initial letter from the IRS will indicate that you will have to submit to an audit examination and interview. While working with a “tax-mill” might not help in this matter, a skilled lawyer can. As an attorney, I have often been able to get my clients out of having to submit to this interview, which can be critical to avoiding misstatements that could be costly to you.
  • Maintain attorney-client privilege: Even if you are not at all guilty of any kind of tax fraud or error, you need to be able to discuss the details of your financial affairs openly. If you hide things from your advocate, that person will find it almost impossible to really help you. But if you share openly to your CPA or other tax specialist, that discussion might not be considered privileged in a court case. This means that anything you say could be used in a legal case against you for tax fraud, tax evasion or another tax crime. When you speak with an attorney, that communication is privileged, so your lawyer cannot be compelled to reveal what you have said.
  • Obtain strong legal counsel: The importance of the issue of privilege outlined above is that you need to be able to lay out your financial details to your lawyer, who can then help you determine whether you are in violation of any laws or regulations, and, based on that determination, help you plan out a course of action for how to respond to the audit. This type of legal counsel based on detailed, confidential knowledge of your financial affairs can be a critical piece to avoid serious legal problems.
  • Avoid penalties: This is the most important thing a lawyer does for a client during the audit: He or she helps the client avoid serious legal penalties. In addition to liens and levies and a range of penalties in civil court, some have faced criminal charges in the most egregious of cases. A skilled attorney can help you avoid any of the penalties that could result from a poorly handled audit.

There are numerous penalties and negative consequences that could come from violations of the tax code or a criminal conviction. A skilled lawyer can help you prepare for an audit and walk you through the entire process to protect your rights and avoid costly tax penalties.

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