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Office audits: Should you go it alone or bring your tax adviser?

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in Employment Law,Human Resources

An experienced tax adviser can provide a security blanket if you're intimidated by the process. And he or she won't likely take the "bait" if the auditor goes on a fishing trip.

During one IRS audit, a doctor lost his temper when the auditor disallowed a small deduction. In his anger, the doctor blurted that he couldn't justify another deduction that wasn't even under consideration in the audit. The IRS ended up disallowing that deduction, too, which added $2,300 to his tax bill.

The downsides: Involving your tax pro in the process will slow down the audit. Plus, it could cost you needless professional fees.

Rule of thumb: If you have solid documentation on your side and can keep your cool, start out on your own. You can suspend the interview to allow for time to consult with an attorney or accountant. Then, you can formally engage the tax pro the rest of the way. But if you're not comfortable representing yourself, bring in a tax pro from the get-go.


Tip: If you hire someone to represent you at the outset, you must fill out Form 2848, Power of Attorney and Declaration of Representative.

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