IRS Audits
Professional representation when the IRS examines your returns
What is an IRS Audit?
An IRS audit is an examination of your tax return to verify that your income and deductions are accurate. It doesn't mean you did anything wrong. Sometimes it's random, sometimes it's triggered by specific items on your return.
But here's what most people don't realize: an audit is a negotiation. The IRS agent examining your return has significant discretion. How you respond, what documentation you provide, and how you communicate can dramatically affect the outcome.
That's why having professional representation matters. You're not required to face the IRS alone, and in most cases, you shouldn't.
What to Never Say to an IRS Examiner
In any IRS audit, the examiner is collecting information to support adjustments and assessments. They are not your friend, your advisor, or your advocate. The instinct to "just answer the questions and be helpful" is one of the most common causes of audits going badly.
Specific things to never say:
"I think..."
Speculation creates record. If you do not know the precise answer, say so. Do not guess.
"That's probably from..."
Same problem. If you do not have the documentation, the examiner will note your uncertainty and assess against you.
"My wife/husband handles that..."
This invites the examiner to expand the audit to your spouse and may open joint and several liability issues.
"We always do it this way..."
This invites a multi-year audit by suggesting the same issue exists in other years.
"My accountant told me to..."
Generally weak as a defense and may invite preparer-error questions that complicate your position.
Anything not directly responsive to the question
Volunteering information widens the audit scope.
The right approach is to answer specifically what was asked, no more, with documentation when available, and to say "I do not know" or "I will need to check my records" when you genuinely do not have the answer.
Eggshell Audits: When Criminal Exposure Is Possible
Most audits are civil. But some audits begin civilly and have potential criminal implications. These are called "eggshell audits" in tax controversy practice.
Indicators that an audit may have criminal exposure:
- •Pattern of significantly underreported income across multiple years
- •Cash-intensive business with poor documentation
- •Unreported foreign accounts (FBAR/FATCA non-compliance)
- •Specific badges of fraud noted in the file (false entries, fabricated documents, hidden assets)
- •The IRS examiner is or has consulted with a Criminal Investigation Division agent
- •Form 4564 (Information Document Request) asks unusually detailed questions about financial intent
Eggshell audits require specialized representation, often with parallel criminal counsel. Statements made in the audit can be used against the taxpayer in a subsequent criminal proceeding. Strategic decisions about cooperation, document production, and interviews are significantly different from regular civil audit defense.
If you suspect your audit has criminal potential, get specialized counsel immediately. The cost of inadequate representation in an eggshell audit is potentially years of incarceration and substantial fines, not just additional tax.
For complete audit defense strategy, see what triggers an IRS audit: the 10 red flags.
Types of IRS Audits
Correspondence Audit (Mail Audit)
The most common type. The IRS sends a letter asking you to verify specific items on your return, such as a charitable deduction, business expenses, or something that caught their attention. You respond by mail with documentation. These are usually the simplest audits.
Office (In Person) Audit
The IRS requires you to come to their office with your records. These are more comprehensive than mail audits and involve face-to-face meetings with an examiner. The scope is usually limited to specific issues identified in the audit notice.
Field Audit
An IRS agent comes to your home or business to examine your records. These are the most intensive audits, usually reserved for complex returns, business returns, or situations where the IRS suspects significant underreporting. Field audits can expand to multiple tax years and multiple issues.
What Triggers an Audit?
The IRS doesn't publicly reveal exactly what triggers audits, but certain factors increase your chances:
High income
The more you make, the more likely you are to be audited
Large deductions relative to income
Claiming $50,000 in charitable donations on $80,000 income will raise flags
Self-employment income
Schedule C filers face higher audit rates
Cash-intensive businesses
Restaurants, retail, and service businesses
Home office deductions
Frequently scrutinized by the IRS
Round numbers
Reporting exactly $5,000 in expenses looks estimated, not documented
Mismatched income
Your return doesn't match the W-2s and 1099s the IRS received
Random selection
Sometimes audits happen for no reason at all
Your Rights During an Audit
You have rights, and the IRS is supposed to respect them:
Right to representation
You can have an attorney, CPA, or enrolled agent represent you. You don't have to speak directly to the IRS.
Right to understand
The IRS must explain what they are asking for and why.
Right to appeal
If you disagree with the audit findings, you can appeal within the IRS and to Tax Court.
Right to privacy
The IRS can only request information relevant to the audit.
Right to finality
There are limits on how long an audit can drag on.
How We Handle Your Audit
Review the Notice
We analyze the audit notice to understand exactly what the IRS is questioning and why. Sometimes the scope is narrow, and sometimes it is broader than it first appears.
Gather Documentation
We work with you to compile the records that support your position. This might include receipts, bank statements, contracts, mileage logs, or other evidence.
Represent You
In most cases, you don't need to attend the audit at all. We meet with the IRS examiner, answer their questions, and present your documentation. This prevents you from accidentally saying something that could hurt your case.
Negotiate the Outcome
If the IRS proposes changes to your return, we negotiate. Our goal is to minimize adjustments, eliminate penalties, or reach a more favorable settlement than you would get on your own.
Appeal if Necessary
If we cannot reach an acceptable resolution with the examiner, we can appeal to the IRS Office of Appeals or, ultimately, to Tax Court.
Common Questions
How far back can the IRS audit?
Generally, the IRS has three years from when you filed to audit a return. But if they find substantial underreporting (more than 25% of income), they can go back six years. If they suspect fraud or you didn't file at all, there is no time limit.
What if I don't have the records they're asking for?
This is a common problem. We can help reconstruct records from bank statements, credit card statements, and third-party sources. It's not ideal, but it's often better than nothing.
Can an audit turn into a criminal investigation?
It's rare, but it can happen. If the examiner suspects fraud, they are supposed to stop the audit and refer the case to the Criminal Investigation Division. This is why having an attorney matters, because communications with your attorney are privileged and protected.
What happens if I ignore the audit notice?
The IRS will make changes to your return based on their assumptions, usually the worst possible assumptions, and send you a bill. You'll lose your chance to dispute their findings and may face additional penalties.
Will I definitely owe more after an audit?
Not necessarily. Sometimes audits result in no change. Occasionally, taxpayers even get refunds if the audit reveals errors in their favor. But more commonly, yes, the IRS will find something they want more tax on.
Don't Face the IRS Alone
An IRS audit is stressful enough without trying to handle it alone. The examiner is trained to ask questions in ways that reveal weaknesses in your position. They do this every day. You don't.
Let us handle the IRS while you focus on your life and business. We know what examiners are looking for, what documentation is needed, and how to negotiate when they push back.