You just received a notice from the IRS that your tax return has been selected for audit.
But the real kicker is the IRS auditor’s request to interview you, face-to-face, possibly at your home or office.
IRS auditors like to move fast, and your letter probably has a date and selected for the interview. There is not much time allowed for you to prepare, ready, or even steady yourself for the IRS.
Meeting with the IRS auditor is especially problematic – there is the anxiety, nerves, taking time off work, fear of the known or unknown, concern over saying something that could inadvertently hurt you, lack of familiarity with the process, or even a feeling of intimidation.
You have rights in IRS audits to protect you against yourself.
One of your most important IRS rights is that of representation. You have the right to retain a professional – it can be an attorney, certified public account or enrolled agent – to help you and represent you in the audit. Your representative takes you out of the middle of this. Your nightmare is their expertise.
Once you have retained a professional, all IRS calls, correspondence and, yes, interviews, route through your representative.
That means your representative handles all the talking, writing, documents and negotiations with the IRS agent.
That includes meeting with the IRS agent – your attorney, for example, is fully authorized and permitted to meet with the IRS for you, and handle all interview questions for you. You do not have to go to the interview and meet with the auditor. Your attorney can do it for you.
Here’s why you don’t have to submit to an interview with the IRS auditor:
1. To force you to sit down with them, the IRS has to send you a summons requiring your appearance at an IRS office. Your IRS audit letter is not a summons – it is a letter, not a legal document, that simply requests that you meet with them and let the IRS auditor interview you.
2. Internal Revenue Code Section 7521(c) requires the IRS to conduct the interview with your representative, not you, if that is your preference (and in most every case, having a professional handle the interview for you should be your preference). You do not have to accompany your representative to the interview.
But to be clear, cooperation with the IRS is imperative. That means your attorney, C.P.A or enrolled agent needs experience in answering IRS auditors’ questions for their clients. They need to have an understanding of what will be asked – after all, your representative will be the one fielding the questions.
I prepare by interviewing my clients in advance of the IRS interview, gathering answers to the IRS questions that I know will be asked based on experience and the client’s specific situation, and preparing to present those answers to the IRS in the best, most correct light possible. I also like to have my clients on standby for a phone call from me (not from the IRS) if there is a question I cannot answer during the interview. I tell the IRS auditor this in advance as part of negotiating that my client will not be attendance for the interview. At the interview, if I am unable to respond, I will pause the audit, respectfully excuse myself from the room, call my client, get the answer, provide it to the auditor, and continue the interview.
Having you on standby for a call from me if necessary is a good middle ground that gives the IRS auditor assurance of cooperation while simultaneously protecting you from the interview. Anxiety, nerves, fear and a lack of understanding of the IRS audit process can often convert a seemingly simple and harmless IRS question into an inadvertent Pandora’s Box of follow-ups. We want to limit your exposure to all that could go wrong in an IRS interview.
It is important to know your rights when audited by the IRS. And you have many rights when the IRS audits you, including the right to representation, the right to have your attorney handle all questions and negotiations for you, and the right to appeal any findings that the IRS auditor makes to an IRS appeals officer or Tax Court before they become final. Taxpayer rights exist for a reason – to even the playing field, protect you, and ensure fairness for you when the IRS come calling with an audit.