Every day the Internal Revenue Service audits individuals and organizations to determine what the IRS describes as their correct tax liability. Generally the IRS audit process involves taxpayer cooperation and agreed case. However disagreement with the examining agent occurs. The taxpayer has procedural rights during and after a tax examination.
A tax audit may involve many different aspects: factual case development, application of state law, interpretation of federal tax law and regulations, and procedural rules. Understanding each part is very important to properly defend the taxpayer.
An IRS revenue agent generally has the power to issue an administrative summons to compel the taxpayer or witness to produce documents and testimony. The summons power is not absolute. A tax controversy attorney can review the case to determine if there are proper defenses to the IRS’ attempts to gather information.
A tax controversy attorney can provide factual information in a manner to persuade the IRS revenue agent that the facts support the taxpayer’s tax return filing (income reporting, deductions, tax credits, and other matters).
The tax law is very complex. Often there is the general tax rule of law, exceptions to the general rule, and then exceptions to the exception. A tax controversy attorney can properly advocate the taxpayer’s interpretation of the tax statute and treasury regulation.
A tax controversy attorney will try to resolve the tax audit with the examining agent, but should also be prepared to administratively appeal the audit conclusion to the IRS Appeals Office. Many cases are resolved at the Appeals Office. A tax controversy attorney who is an experienced tax litigator will often be in a position to obtain a superior settlement.