Why Should You Hire Representation for an IRS Examination?

Last week I met with a new client who received a Form 4564 from the IRS informing them that their 2019 return was under examination. Specifically, the IRS requested several categories of documents to substantiate expenses reported on their Schedule C. Believing they did nothing inappropriate on their professionally prepared return, the taxpayer attend the initial interview on their own to explain why certain expenses were properly included on their Schedule C.

What this new client did not realize was that the revenue agent they met with understood nothing about their small business and was not inclined to consider any explanations that were not supported by technical tax authority. Of course, this client does not know tax law and was lost in the technical tax speak being tossed around in the interview. The taxpayer left the meeting confused, defeated, and subject to an even broader examination than where they started.

This is a classic case of why it is a good idea to get representation early on. Besides being able to speak the language of the IRS, a good tax representative can preemptively spot any positions taken on a tax return that the IRS will question and either identify technical authority to support those positions or explain to the taxpayer why they should consider agreeing to an adjustment. This can expedite an examination saving the taxpayer time and frustration. Best of all, once a taxpayer has secured representation the IRS will no longer contact them directly – which was the biggest relief for my new client.

If you are facing an examination, you need an even playing field. It is your right as a taxpayer to hire a representative to look out for your best interests. Contact our office for a free consultation to see if we can help.


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