Tax Audit Protection
What tax audit protection is available to a taxpayer selected for an IRS audit? The proper place to begin this inquiry is with “The Bible” of IRS rules and procedures, the Internal Revenue Manual or IRM. The IRS provides all IRS audit guidelines. For example, must the taxpayer attend an interview with the auditor? This is a question that many have, including lawyers and CPAs alike. Well, here is the rule as stated in the IRM:
4.10.3.2.1 (03-01-2003)
Who To Interview
1. Interviews should always be held with the persons having the most knowledge concerning the total financial picture and history of the person or entity being examined.
2. Internal Revenue Code Section 7521(c) states that an examiner cannot require a taxpayer to accompany an authorized representative to an examination interview in the absence of an administrative summons. [Emphasis added] However, the taxpayer’s voluntary presence at the interview can be requested through the representative as a means to expedite the examination process.
So you see, according to the IRS Bible the IRS cannot require you, the taxpayer to participate in an examination interview. This is why some websites advertise that you will not be required to attend the IRS audit interview. However, asserting this right is sometimes not the appropriate thing to do. The question of Do I attend or Don’t I attend should always be discussed with a trained tax lawyer in order to determine the correct course to follow.
And what about that trusted tax lawyer? How do the IRS audit guidelines look at this player:
4.10.3.2.1.1 (03-01-2003)
Powers of Attorney
1. When a taxpayer obtains representation, the examiner will ensure that the authorization, Form 2848, Power of Attorney (POA), Form 8821, Tax Information Authorization (TIA), or a similar privately designed form, is properly executed. Service personnel are prohibited from disclosing tax information of a confidential nature to any unauthorized person. Upon receipt, the authorization must be date stamped and reviewed to ensure that it contains all required information. See IRM 4.10.11, Power of Attorney and Related Authorizations for complete instructions for reviewing and processing powers of attorney.
2. Practice before the Service is restricted to persons recognized or qualified under provisions of Circular No. 230. If the taxpayer’s representative impedes or delays the examination by failing to promptly submit the taxpayer’s records or information requested by the examiner, failing to keep scheduled appointments, or failing to return telephone calls and written correspondence, the examiner may initiate procedures to bypass the representative and deal directly with the taxpayer, as outlined in IRM 4.10.11, Power of Attorney and Related Authorizations.
As you can see, even your trusted attorney has rules and obligations that he or she must follow when representing you before the IRS. Tax audit protection is there for you, but it’s never “one-way” only; the IRS audit guidelines always protect and empower the IRS auditor too.
Tags: Beating The Tax Man