Mastering Your IRS Audit: The Power of Professional Representation

What Is An IRS Audit And Why Does Representation Matter?

IRS audit defense representation is when a qualified professional—such as a tax attorney, CPA, or enrolled agent—acts on your behalf during an IRS examination of your tax return. Here’s what you need to know:

• Who Can Represent You: Attorneys, Certified Public Accountants (CPAs), and Enrolled Agents are authorized to represent taxpayers before the IRS
• What They Do: Develop defense strategies, prepare and organize documents, handle all IRS communications, and attend meetings on your behalf
• Why It Matters: Professional representation reduces stress, protects your rights, and significantly improves your chances of a favorable outcome
• The Stakes: In 2024, the IRS conducted more than 500,000 audits, leading to nearly $30 billion in additional tax assessments

An IRS audit can feel overwhelming. The moment you open that audit notice, your stress levels spike. You’re facing questions about your income, deductions, and financial records—and the IRS has teams of trained examiners on their side.

You don’t have to face this alone.

While fewer than 1% of individual returns are audited, the risk rises sharply for high earners, businesses, and those with complex filings. The audit process involves multiple stages, from initial notification through document review, examination, and potentially appeals or even tax court. At each stage, having experienced representation can mean the difference between a fair resolution and significant penalties.

Professional representatives understand IRS procedures, know how to communicate effectively with examiners, and can identify opportunities to minimize your liability. They handle the technical details while you focus on your life and business. Most importantly, they ensure your rights are protected throughout the process.

As Attorney Samuel Landis, Managing Partner at Segal, Cohen & Landis, I’ve spent over 15 years specializing in IRS controversy resolution and IRS audit defense representation, developing innovative settlement techniques that have saved clients millions in assessments and penalties. My experience includes teaching tax law and handling complex audits across industries, from small businesses to high-profile entertainment clients.

Understanding The IRS Audit Process From Start To Finish

Receiving an IRS audit notice can feel like a punch to the gut. Your heart races, your palms sweat, and suddenly you’re questioning every deduction you’ve ever claimed. But here’s the thing: understanding what actually happens during an audit—from the moment you’re selected to the final resolution—can transform anxiety into confidence.

Let’s walk through this together.

How Taxpayers Are Selected for an Audit

The IRS doesn’t just randomly pick names out of a hat (though sometimes it feels that way!). They use several sophisticated methods to identify returns that deserve a closer look.

Computer screening is the most common trigger. The IRS uses a system called the Discriminant Inventory Function (DIF) score—essentially a secret formula that flags returns that look unusual compared to others in similar income brackets. If your deductions are much higher than typical for someone earning what you earn, your return might get a high DIF score and land in the audit pile.

Information matching causes countless headaches every year. The IRS receives copies of every W-2, 1099, and K-1 that gets issued. Their computers automatically compare these forms to what you reported on your return. If there’s a mismatch—even a small one—you’ll likely get flagged. This often leads to a correspondence audit asking you to explain the difference.

Related examinations can pull you into an audit through no fault of your own. If your business partner, investor, or a company you’re involved with gets audited, the IRS might examine your return too because of your connection. It’s guilt by association, in a way.

Sometimes the IRS targets specific issues they believe are prone to errors or abuse. They might focus on home office deductions one year, or rental property losses the next. And while fewer than 1% of individual returns get audited, high earners and businesses face significantly higher odds. The more complex your financial situation, the more interested the IRS becomes.

For a deeper dive into whether your situation puts you at higher risk, check out our article on Are You at Risk of an IRS Audit and How Far Back Can the IRS Go?

The Audit Timeline and Statute of Limitations

One of the most common questions we hear is: “How far back can they go?”

Generally, the IRS can audit returns filed within the last three years. That’s the standard statute of limitations for assessing additional tax. However, if they find a substantial error—specifically, if you’ve understated your gross income by more than 25%—they can reach back six years instead.

In practice, most audits focus on returns from the last two years. It’s rare for the IRS to dig deeper than that unless there’s a compelling reason. And here’s something important: the statute of limitations clock starts three years after your return was due or was filed, whichever is later.

Sometimes you and the IRS might agree to extend this period. This gives you more time to gather documents or allows for an appeal without rushing. While extending might seem counterintuitive, it can actually work in your favor when you need breathing room to build a strong defense.

Understanding these timelines is crucial for effective IRS audit defense representation. Knowing what years are at risk helps us develop the right strategy from day one.

Your Rights as a Taxpayer

Here’s something many people don’t realize: you have rights during an audit. Real, enforceable rights that the IRS must respect.

The Taxpayer Bill of Rights guarantees ten fundamental protections. You have the right to be informed about what the IRS is doing and why. You have the right to quality service and the right to pay no more than the correct amount of tax. Perhaps most importantly, you have the right to challenge the IRS’s position and be heard, and the right to appeal their decisions to an independent forum.

You also have the right to retain representation—which means you can have a qualified professional handle everything on your behalf. In fact, with proper representation, you might never have to speak directly to an IRS auditor at all.

Other rights include the right to finality (the audit process must eventually end), the right to privacy, the right to confidentiality, and the right to a fair and just tax system.

We take these rights seriously. They’re not just words on paper—they’re protections we actively enforce for our clients. You can read the full details in the IRS’s own publication, Your Rights as a Taxpayer.

Audit Outcomes

Every audit eventually ends in one of three ways, and understanding these outcomes helps you know what to expect.

No change is the best possible result. The auditor reviews everything and finds no errors. Your return is accepted exactly as filed. This happens more often than you might think, especially when you have solid documentation and strong IRS audit defense representation.

Agreed means the auditor proposes changes, and you accept them. You’ll sign an examination report acknowledging the adjustments. If you owe additional tax, the IRS will discuss payment options with you. Sometimes agreeing makes sense—if the proposed changes are reasonable and fighting them would cost more than accepting them.

Disagreed is when things get more complex. You don’t accept the auditor’s findings, and you have several paths forward. You can request a manager conference to discuss your disagreements with the auditor’s supervisor. If that doesn’t resolve things, you can file a formal appeal with the IRS Office of Appeals, which is an independent body within the IRS designed to settle disputes fairly.

If Appeals doesn’t work out, you still have options. You can petition the U.S. Tax Court or pursue your case in federal courts. These are serious steps that require experienced legal guidance.

When you disagree with audit findings, having a clear strategy is essential. Our article on What to Do When You Disagree with an IRS Audit walks you through the process in detail.

The Different Types of IRS Audits

Not all audits are created equal. The IRS conducts three main types, and the one you face will significantly affect your experience.

A correspondence audit is the simplest and least intrusive. You receive a letter asking for additional documentation or clarification about specific items on your return. Maybe they want receipts for your charitable contributions or proof of medical expenses. Everything happens through the mail—no face-to-face meetings required. These are the most common type of audit, and professional representation can handle all the back-and-forth communication while you go about your life.

An office audit steps things up a notch. The IRS asks you to visit a local IRS office for an in-person meeting. These audits typically cover several items on your return and involve more detailed questioning. The good news? A qualified representative can attend these meetings on your behalf, so you never have to sit across from an auditor.

A field audit is the most comprehensive and serious type. An IRS agent comes to your home, business, or your representative’s office to conduct a thorough examination of your financial records. They’ll review books, accounts, bank statements, and more. Field audits are usually reserved for businesses or individuals with complex tax situations. This is where expert IRS audit defense representation becomes absolutely critical.

For more detailed information straight from the source, the IRS provides More info about IRS Audits on their website.

How IRS Audit Representation Differs for Individuals vs. Businesses

While the fundamentals of defending against an audit remain consistent, the approach varies significantly depending on whether you’re an individual taxpayer or a business.

Individual audits typically focus on common trouble spots. The IRS might question unreported income—maybe you forgot about a 1099 or some side income. They might scrutinize deduction irregularities, especially popular ones like home office expenses, charitable contributions, or medical deductions. Sometimes they conduct what’s called a “lifestyle audit,” where they compare your reported income to your apparent standard of living. Our goal in these cases is to substantiate every deduction, reconcile any income discrepancies, and protect your personal assets.

Business audits are a different beast entirely. They’re more complex, more time-consuming, and the stakes are considerably higher. The IRS might examine payroll tax reporting, depreciation schedules, inventory valuation, large expense categories, or the classification of workers as employees versus independent contractors.

Errors in business audits can lead to steep penalties, interest charges, and in extreme cases, even criminal exposure. What’s more, an audit of your business often expands to include the personal returns of the owners. It’s not unusual for the scope to grow, potentially covering multiple tax years or related entities.

The disruption to your business operations can be significant. Time spent dealing with an audit is time not spent running your company. Our Business Tax Attorneys in Los Angeles understand this reality. We work efficiently to minimize both the financial impact and the operational stress, so you can focus on what you do best—running your business.

The Core Of Professional IRS Audit Defense Representation

When the IRS comes knocking, having a seasoned professional by your side isn’t just a luxury—it’s often a necessity. Professional IRS audit defense representation is the process of having a licensed expert act on your behalf, handling all aspects of the audit from start to finish.

Who Can Represent You During an IRS Audit?

Not just anyone can represent a taxpayer before the IRS. The agency authorizes specific professionals who are bound by ethical standards and have demonstrated competence in tax matters:

• Tax Attorneys: As licensed legal professionals, they offer the highest level of protection, including attorney-client privilege, which ensures confidentiality for your communications. They are experts in tax law, IRS procedures, and litigation, making them invaluable for complex or potentially contentious audits.
• Certified Public Accountants (CPAs): CPAs are licensed accounting professionals with expertise in financial reporting and tax preparation. They are well-suited for audits involving financial records and accounting principles.
• Enrolled Agents (EAs): Enrolled Agents are tax practitioners authorized by the IRS to represent taxpayers before the agency. They have unlimited representation rights, meaning they can represent taxpayers for any tax matter, including audits, appeals, and collections.

Regardless of their specific credential, any representative you choose will need a signed Form 2848, Power of Attorney, from you. This form officially authorizes them to communicate with the IRS on your behalf, receive confidential information, and act as your agent.

What Are the Key Services Provided by a Tax Audit Representative?

A professional tax audit representative, like the experienced team at Segal, Cohen & Landis, provides a comprehensive suite of services designed to protect your interests:

• Strategy Development: We don’t just react to the IRS; we proactively develop a robust defense strategy custom to your specific audit issues, identifying potential weaknesses and building a strong case.
• Document Preparation and Organization: Gathering and organizing all requested financial documents can be a daunting task. Your representative will guide you through this process, ensuring all necessary records are submitted accurately and efficiently.
• Direct IRS Communication: One of the biggest benefits is that your representative handles all correspondence, phone calls, and interactions with the IRS. This shields you from direct contact with auditors, reducing stress and preventing inadvertent errors.
• Meeting Attendance: Your representative will attend all audit meetings, whether they are office audits or field audits. They will speak on your behalf, present your case, and negotiate with the auditor.
• Negotiation and Resolution: Our primary goal is to achieve the best possible outcome for you, whether that’s a “no change” result, a reduced tax liability, or a favorable settlement. We leverage our expertise to negotiate effectively with the IRS.
• Appeals Representation: If you disagree with the audit findings, your representative can guide you through the IRS Appeals process, presenting your case to an independent appeals officer.

Key Benefits of Hiring a Professional for IRS Audit Defense Representation

When facing an IRS audit, the decision to hire a professional can profoundly impact the outcome and your peace of mind. Let’s compare self-representation versus professional representation:

In short, professional representation levels the playing field. The IRS has a team of experts; you should too. A skilled representative can often negotiate for IRS penalty abatement and ensure you don’t pay a penny more than you legally owe. The confidentiality provided by attorney-client privilege is a critical advantage, allowing for open and honest discussion without fear that your words will be used against you.