IRS Representation & Audit Assistance

The importance of being REPRESENTED by a licensed Enrolled Agent during an IRS or State tax audit or tax dispute cannot be stressed enough.

When the IRS conducts your audit, they will ask you to present certain documents that support the income, credits or deductions you claimed on your return. You would have provided Sterling Tax Team all these documents to prepare your return. Therefore, the request should not require you to create something new.

Your notice will instruct you on how and when to present your records. If the IRS is conducting your audit by mail, the address to mail the requested records will be on your notice. If the IRS is conducting your audit in person, bring the records with you. Never mail original records. Send the IRS copies.

Audit Timelines?

The IRS can audit returns filed within the last three years but there are some situations in which the IRS can audit even older returns.

IRS and state governments can select any individual or business for audit at any time.

Common Audit “Red Flags”:

  • Net Operating Losses
  • Cryptocurrency or Other Digital Currency Transactions
  • The amount and type of deductions being claimed on the tax return.
  • Advance Child Tax Credit Payments
  • Using Round Numbers
  • Earning Substantial Income
  • Taking Early Withdrawals from Retirement Accounts
  • Home Office Deductions
  • Self-Employed and/or Working as an Independent Contractor
  • Owning a Cash Based Business
  • Claiming a Hobby as a business
  • Having Cash or Assets in a Foreign country
  • Drawing Unemployment Income

Examples of Records the IRS Might Request:

  • Receipts
  • Bills
  • Canceled Checks
  • Legal Papers
  • Loan Agreements
  • Logs or Diaries
  • Tickets (Label travel ticket, Lottery Tickets)
  • Medical and Dental Records
  • Theft or Loss Documents
  • Employment Documents
  • K-1

What steps should I take if I am selected for an audit?

If you have been selected for audit, please follow the steps:

  1. Contact Sterling Tax Team immediately at 425-494-5502
  2. Send us a copy of your Audit letter by:
    • Fax (425-494-5504), or
    • Upload a copy of the letter through your secure Client Portal
  3. You must also contact the IRS or state auditor within the time prescribed in the audit letter.
  4. Schedule a time to meet with our Enrolled Agent
  5. Recognize that you will need to put time into gathering records and preparing for the audit
  6. Organize your records by year and type of income or expense, and include a summary of transactions.

What are my rights?

Your rights as a taxpayer, as well as the examination, appeal, collection, and refund processes, include:

  • A right to professional and courteous treatment by IRS employees.
  • A right to privacy and confidentiality about tax matters.
  • A right to know why the IRS is asking for information, how the IRS will use it and what will happen if the requested information is not provided.
  • A right to representation, by oneself or an authorized representative. An Enrolled Agent is a person who has earned the privilege of representing taxpayers before the Internal Revenue Service. Enrolled Agents are generally unrestricted as to which taxpayers they can represent, what types of tax matters they can handle, and which IRS offices they can represent clients before.
  • A right to appeal disagreements, both within the IRS and before the courts.

See more about your fundamental rights as a taxpayer here.