In our last article, “Choosing the Right Tax Professional,” we discussed the two main reasons an individual or business would seek out professional tax advice: help with tax planning and help with tax compliance. In both cases, it was clear a federally licensed Enrolled Agent (EA) was the best choice for addressing either of these needs. However, there’s a third area of tax practice which many often require but don’t fully understand called “tax representation”.
WHAT IS TAX REPRESENTATION?
In the United States, the IRS and all states allow a taxpayer to have an authorized representative during income tax exams, audits, audit appeals, collections, settlements, and collection appeals. The representative must be authorized to practice before the IRS or state, and specific credentials are required in order to do so.
Regardless of the situation, it's your responsibility to prove to the IRS you have properly reported all income and taken the correct deductions. This typically involves submitting the proper documents to your auditor. However, the IRS wins the majority of its cases because taxpayers are unable to provide this documentation and are not trained to interpret current tax law.
Even if the amounts involved seem trivial, the taxpayer is always best served by having an objective intermediary who understands tax law and can act as their spokesperson. The tax representative can keep the dialog with the IRS focused on the issues specified in the audit or collections notice.
WHY DO I NEED TAX REPRESENTATION?
All too often, taxpayers attempt to deal with the IRS themselves and, because they don’t know what they’re doing, things can be misrepresented or overlooked. This can lead to the IRS expanding the scope of an audit or it can disrupt the effort of reaching a settlement.
Effective representation requires knowing how the IRS is structured and how it operates. EAs, CPAs and attorneys are all authorized to represent taxpayers before the IRS. However, EAs often have the most experience with tax representation and many are extensively trained in it. EAs are also authorized to take on clients for whom they did not prepare the return.
WHERE CAN I FIND HELP?
If you find yourself on the receiving end of notices from the IRS, it is best to seek out someone who specializes in tax representation. William D. Truax and his friendly team of EAs and licensed tax preparers have been representing individuals and businesses across the country for over 30 years. He’s not only authorized by the federal government to represent tax payers before the IRS, but is also a member of the Bar of the United States Tax Court – a privilege very few EAs are granted.
Of course, we'd suggest if there's even a hint the IRS investigation may involve a criminal matter, it is time to get yourself a tax attorney who specializes in criminal tax representation. There is a small bar of attorneys with the right experience and training to do criminal tax work. Potential clients should be prepared to pay steep fees – opening quotes can start in the low six figures!
For more information, please visit www.truax.net or click below to schedule a free consultation today!