You are being audited. Failure to comply with federal law can result in high and crippling tax penalties. In serious cases, the IRS may even initiate criminal action against tax law violators. Even so, you should never take an audit lightly.
It's a serious matter with potentially significant consequences. In most cases, taxpayers benefit from having an experienced tax attorney represent them in transactions with the IRS related to an audit. Let's see when you should contact a tax audit lawyer after receiving an audit notice. In addition, when you hire an attorney, you have attorney-client privilege.
While you may not have done anything wrong or illegal that would warrant an audit, having that privilege allows you to freely communicate with your lawyer. It gives you, as a taxpayer, an extra layer of protection and trust when you face the IRS. Taxpayers who receive an audit notice have the right to have a tax lawyer represent them in their relations with the IRS. Like any stereotype, there is a small grain of truth in that conception of a tax audit, especially without a tax auditing lawyer.
Having an attorney-client relationship during the state's sales tax audit process is like hiring a guide to help you climb a mountain. If you choose to attend an audit without adequate representation, you may be wrong and make emotional rather than rational statements due to the emotions of helplessness, irritation, aggravation, and anxiety caused by the experience of being audited and, sometimes, intentionally cultivated by the auditor. Taxpayers can use that time (which the IRS will normally extend an additional 30 days at least once) to collect the information that the IRS has asked the taxpayer to send by mail or to take it to a field or office audit. In the case of an in-person audit, the IRS assigns the taxpayer an auditor with whom to schedule the time and place of the audit interview.
It happens to a lot of taxpayers, it's not the end of the world and you'll most likely get through it without problems with the help of an experienced tax auditing lawyer. The popular idea of an audit is that of an IRS auditor, similar to a robot and who doesn't smile, who turns his life or his business upside down, looking for the slightest mistake or an underpayment to hang around his neck. They should control both the documents that are requested and the methods by which the audit is carried out, and then the lawyer will be there to help the process move forward. That goes a long way to making you and the IRS more equal when it comes to managing and resolving your audit.
That said, the auditing process can be easier if you let an experienced tax lawyer navigate the IRS and audit waters for you. Taxpayers often believe that hiring an attorney will make them look guilty in the eyes of the IRS or a government agency. Contrary to popular belief, the IRS doesn't seek to “trap taxpayers,” and most audits, even those that result in additional liability, don't put taxpayers in legal trouble. A tax audit lawyer can't make audits “magically disappear,” but they can give you the peace of mind that you have a representative with at least as much knowledge and experience as the IRS auditor assigned to your case.
The biggest problem I see in most sales tax audits is due to the lack of adequate control at the beginning of the audit. They have experience working with the IRS and have conducted audits and know what to expect from the IRS, in a way that the taxpayer cannot.
