IRS Audit Attorney

With more than a decade of legal, business, and tax experience, the team at Milikowsky Tax Law is on hand to help defend your business in an IRS audit.

There are few things more threatening to a business owner than a letter from the IRS.

An audit can be a time-consuming process. While you cannot avoid a tax audit, you can minimize your risk of an audit by avoiding potential flags on their tax return. The most frequent IRS audits are caused by inconsistencies or errors in your tax return that raise red flags in the eyes of the IRS.

When you work with Milikowsky Tax Law, you get more than an experienced tax litigation attorney. You get an experienced business and tax advisor who can work with you to reduce your chances of being audited, with our comprehensive tax return assessment system and years of business experience.

California’s Top IRS Audit Attorney

Our leading tax litigation attorney, John Milikowsky, has decades of experience representing countless businesses in legal tax matters. Mr. Milikowsky is dedicated to relentlessly defending his clients in everything from state and federal tax audits to criminal tax investigations. As a full-service tax law firm, we frequently work with business owners to empower owners to identify issues on their own tax returns. While there is no way to guarantee you will avoid a tax audit, we can teach you to significantly minimize your risk of an audit.

Milikowsky Tax Law Defends Businesses in IRS Audits

When you’re faced with the formidable presence of a tax audit, don’t panic. Reach out to Milikowsky Tax Law, and we will protect your company to keep your business in business. Our skilled tax litigation attorneys will protect your rights every step of the way.

Whether you’ve just received a letter from the IRS, or you need help analyzing your legal rights and financial data reported on your tax returns, contact us today. The team at Milikowsky Tax Law is here to help.

San Diego Tax Attorney – Your Relentless Advocate in IRS Audits

Business owners may not be sure where to start if IRS audits their company. However, an IRS audit doesn’t have to overwhelm your life or impede your ability to conduct business. With the experienced team at Milikwosky Tax Law, you can navigate the process of an IRS audit secure in the knowledge that your tax attorneys are advocating for you every day.

There is little to no margin for error during an audit, a tight timetable, and potentially severe consequences for a poorly handled interaction with IRS. Unlike CPAs who do not have attorney-client privilege, attorneys are able to speak with your IRS officer on your behalf without risk of subpoena or summons of records discussed.  A qualified attorney can, review your documents with an expert eye, create the right strategy for you, represent you or your business, and provide valuable advice and guidance.

If you receive a letter from IRS confirming your business tax return has been selected for examination, review your return and identify the items that will likely be investigated so you can be prepared. Then, before communicating with IRS, reach out to an experienced IRS audit attorney. Having a game plan is critical. You want to be honest and prepared when speaking with your IRS revenue agent.

Anytime you file taxes, there is a chance that your tax return might be audited by the Internal Revenue Service (IRS). The agency conducts standard procedures to find any errors or discrepancies among taxpayers. The audit process is meticulous and, should you find yourself under the scrutiny of IRS, will require detailed information from you. 

In the article below, you’ll learn about the audit process and frequently asked questions surrounding IRS audits.

Why was I selected for an IRS Audit?

There are different reasons you may be flagged for IRS audits. Some are due to random checks; however, you have a low chance of being audited this way. Most taxpayers have less than a 0.6% chance of receiving a random audit check. 

IRS runs tax returns through its Discriminant Information Function (DIF) system to continually update their database and make sure they are tracking industry benchmarks for each industry and tax bracket. 

The DIF system also checks for incorrect tax filing information. Any discrepancies in tax forms, such as an imbalance of tax returns, a discrepancy between reported earnings and employer filings, or unreported cash transactions by one member of a transactional party, will trigger DIF to send your return to an IRS audit officer. 

People are more susceptible to an audit if they:

  • Earn less than $25,000 or more than $500,000
  • File incorrect or incomplete returns 
  • Have large numbers of cash transactions 
  • Claim a disproportionate number of deductions 
  • Are self-employed
  • Have a home-based business
  • Have a cash business 
  • Have foreign assets 

Sometimes you can be audited as a result of your business partners or investors going through an audit. 

How Will I Know If I am Selected for an Audit?

You will know if you are selected for an audit if you receive a verified letter in the mail from IRS. They do not call to notify you about your audit. 

What Do I Do If I’m selected for an Audit?

If you or your business are selected for an audit, make sure you read all of the information sent to you in your audit notification letter.  The letter and accompanying information request packet will notify you as to what entity is being audited (business or personal) what year(s) are under review and who your auditor is. Once you know what IRS needs, make sure you collect all of the records and supporting documentation requested (but nothing additional). You will need to submit records from banks, vendors, and businesses you have worked with, invoices and pay stubs, payroll records, and medical expenses among other information.

Should I Hire an IRS Tax Attorney to Help Me?

We suggest contacting a qualified tax attorney to help guide you through your audit, to ensure you are timely, responsive, compliant, and do not unintentionally increase the scope of your audit to other areas of your business or personal finances that would otherwise remain unscrutinized.. There is little to no margin for error during an audit, a tight timetable, and potentially severe consequences to a poorly handled interaction with IRS. Unlike CPAs who do not have attorney-client privilege, attorneys are able to speak with your IRS officer on your behalf without risk of subpoena or summons of records discussed.  A qualified attorney can, review your documents with an expert eye, create the right strategy for you, represent you or your business, and provide valuable advice and guidance. 

How long do I have to reply to an IRS audit?

You have 30 days to reply to the initial audit letter. Do not hesitate, and make sure you take the appropriate steps early on. IRS is not likely to provide extensions unless you have a good reason.  Your attorney can help by advocating for more time with the IRS agent.  A good attorney will know many of your local IRS auditors and have strong relationships built on well-structured prior cases and mutual respect. 

How Long Do Audits Take?

The time it takes to conduct an audit depends on the case. It fluctuates depending on:

  • The seriousness of the tax reporting error
  • When and whether the right information is provided to IRS
  • Communication between the person being audited and IRS officer

How Many Years of Tax Returns Can IRS audit?

IRS audits tax returns from the past three years; however, most are from the past two years. Only when IRS agents find discrepancies within the audit they are conducting do they dig for information older than three years. Most audits do not look for information past six years. Though in cases of criminal audits IRS can look back 9 years and longer. 

If you or someone you know received an audit letter from IRS, reach out to our expert team at Milikowsky Tax Law. We have over a decade of experience working with IRS and tax audits and are experts in defending business owners in the face of IRS or other government agency audits. 

A maze representing the complexity of the IRS Audit Lifecycle

Understanding the lifecycle of an IRS audit is crucial for any taxpayer faced with this daunting process. An audit can touch upon various aspects of your financial history, and being prepared at each stage is key. This guide will walk you through the stages of an IRS audit, from initial contact to resolution, equipping you with the knowledge to manage the process effectively.

The Initiation of the Audit

When the IRS starts an audit, they send you a letter. This letter tells you who will be looking at your tax return and how to contact them. It’s important to check if the name and other details are correct. Sometimes, there can be mistakes, so it’s good to fix them early on.

The letter also tells you which years of your taxes they’re going to check. This helps you know what documents to gather and what to prepare for. Usually, the IRS can go back three years to look at your taxes, so it’s important to keep your records for that long.

If you have a business like an S Corporation (S Corp) or a Limited Liability Company (LLC), the audit might also include your business taxes. This means they’ll look at both your personal and business finances. Knowing this helps you understand what they’ll be looking at.

After you get the letter, it’s a good idea to start getting your documents together. This includes things like your tax forms and financial records. If you need help, you can talk to a tax professional who can guide you through the process. 

Responding to the IRS

Upon receiving the audit letter, promptly contacting the revenue agent is imperative. You typically have 10 days to reach out, and this is the time to request a deferral of the initial meeting to gather your records and potentially engage a tax attorney. It’s not just about having time on your side; it’s about being thorough and meticulous in preparing your defense.

Gathering Documentation

Once you’ve contacted the IRS, the next step is to gather all the documents they ask for. This includes things like your tax forms and financial records. You’ll need to compare your tax returns with the information the IRS has. You can get this information from the IRS through a wage and income transcript for individuals or an I-R-P-T-R report for businesses. It’s important to make sure all your income is accurately reported and that you have solid records to back up your expenses.

Remember, IRS audits aren’t just about checking numbers; they’re about understanding your financial story. The better prepared you are with your documents, the easier it is to explain your financial situation.

“IRS audits are not just about financial scrutiny; they’re about understanding the story behind the numbers. The more prepared you are with your documentation, the clearer your financial narrative becomes.”

The IRS Interview: Unveiling Your Financial Story

At some point in the audit process, you’ll sit down with the IRS for an interview. This meeting is where you’ll have a chance to explain your financial situation and answer any questions they may have. It’s important to be prepared for this interview because it can cover a wide range of topics.

During the interview, the IRS may ask about different aspects of your financial life. This could include things like foreign bank accounts, cryptocurrency transactions, and cash dealings. If you’ve been involved in any complex financial matters, be ready for a detailed discussion.

This interview is your opportunity to provide explanations and clarify any misunderstandings about your financial activities. Being organized and having all your documentation in order can help streamline this process and ensure that you’re able to effectively communicate your side of the story.

Understanding IRS Requests: Providing the Necessary Information

After the initial contact with the IRS, you’ll receive an Information Document Request (IDR). This document will outline all the specific documents and information that the IRS needs from you to complete the audit.

It’s crucial to respond to these requests in a timely and complete manner. Failure to do so can lead to further complications and delays in the audit process. Additionally, providing the requested information promptly can help prevent the IRS from obtaining the information through other means, such as a summons.

Review the IDR carefully and make sure you understand exactly what documents are being requested. Organize your records accordingly and provide clear and accurate responses to each item on the list. This will help ensure that the audit process proceeds smoothly and efficiently.

The Conclusion of the Audit:

After engaging in back-and-forth communication and diligently submitting all required documents, the audit process nears its end. At this crucial juncture, the IRS compiles its findings into a comprehensive document known as the Revenue Agent Report (RAR). This report outlines any adjustments made to your tax returns and provides detailed explanations for each modification.

It’s imperative to meticulously scrutinize the RAR upon receipt. Carefully review every adjustment made by the IRS to ensure accuracy and fairness. If you find discrepancies or disagree with any of the IRS’s findings, you have the right to challenge them. This may involve submitting a formal protest letter to the IRS, initiating the appeals process.

During the appeals process, an independent IRS appeals officer will review your case, along with any additional evidence or arguments you present. This officer will reassess the audit findings and consider your perspective before reaching a decision. If you remain unsatisfied with the outcome of the appeals process, you have the option to escalate the matter to Tax Court.

Taking your case to Tax Court involves presenting your arguments and evidence before a judge, who will make a final determination based on the merits of your case and applicable tax laws. While pursuing litigation may seem daunting, it provides an opportunity to seek a fair resolution through a formal legal process.

Navigating to Resolution:

The duration of an IRS audit can vary significantly based on various factors, including the complexity of your case and the clarity of your financial records. Personal audits typically span four to six months, whereas business audits may extend for a year or more. However, it’s essential to note that these timelines are not set in stone and can be influenced by external factors.

Throughout the audit process, maintaining open communication with the IRS and adhering to deadlines is paramount. Promptly responding to IRS inquiries and providing requested documentation can help expedite the audit process and prevent unnecessary delays. Additionally, staying organized and keeping detailed records of all communications and submissions can streamline the resolution process.

While the audit process may be challenging and time-consuming, it’s essential to remain patient and focused on achieving a favorable outcome. By staying informed about your rights and responsibilities as a taxpayer and seeking professional guidance when necessary, you can navigate through the audit process with confidence and ensure a fair resolution to any tax-related issues.

Final Notes

An IRS audit is a complex process requiring a strategic approach. Awareness, preparation, and expert guidance are your pillars of strength as you navigate through the audit’s lifecycle. Should you need assistance, Milikowsky Tax Law is ready to offer the expertise and support necessary to manage your audit efficiently and effectively.