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Tax Audit Representation

We aren't afraid of the tax auditors. When you need tax audit representation, we are ready to help you.

Do you or a friend need a representative to help deal with a tax audit? Many taxpayers decide to handle a tax audit themselves, and discover they may have been "penny wise," avoiding a representative's fee, but "pound foolish," because they received a bill for a significant tax deficiency.

One of our clients recently had a tax audit relating to a big net operating loss carryback. He had already received the refund from the carryback claim, which was spent on living expenses. He decided to handle the audit himself, because "he had previously done it successfully." The tax laws have become significantly more complex since he previously handled an audit, and his circumstances had also changed: he liquidated a corporation and experienced business losses which had resulted in the carryback.

The IRS agent proposed to disallow about $75,000 of tax deductions. Repaying the tax refund plus interest would be devastating.

After a strategy session with the client and his attorney, we decided the best course of action was for Mike Gray to meet with the auditor to try to salvage the situation. Mike was able to satisfy the auditor that the losses were legitimate, resulting in a "no change" report, without having to appeal the case!

This was a fortunate result. In some cases, the taxpayer's responses can make a case unsalvageable.

Why does it make such a difference whether you have a qualified representative handle your audit? First, a qualified representative speaks the same language as the IRS agent, so they can effectively communicate your position. Second, the representative is a peer with the agent, which removes the intimidation element. Third, the representative is aware of the potential issues and can help you properly prepare for the examination. By representing you on neutral ground, the representative can help avoid damaging issues.

Recently, one of our clients, an S corporation, was notified that they were to be audited. This client is in financial distress and could ill afford any deficiency adjustments. We had a preliminary meeting with the client to assure that the information was assembled in an orderly way for the agent to review. The audit was conducted at our office in two days with a minimal fee investment for the client. A "no change" report was issued shortly after the end of the field work. This was one of the fastest audits we ever handled.

We aren't afraid of the tax auditors. When you need representation, we are ready to help you.

One of the best ways to prepare for a tax audit is to have your tax returns prepared by an outstanding tax practitioner, like the team at Michael Gray, CPA.

To find out if we are the right CPAs for you, call Dawn Gray today at (408) 918-3166.

For more articles and information about new tax real estate tax developments, subscribe to our newsletter, Michael Gray, CPA's Real Estate Tax Letter.

IRS Circular 230 Disclosure: As required by U.S. Treasury Regulations, you are hereby advised that any written tax advice contained on this website was not written or intended to be used (and cannot be used) by any taxpayer for the purpose of avoiding penalties that may be imposed under the U.S. Internal Revenue Code.

We aren't afraid of tax auditors. When you need tax audit representation, we are ready to help you.

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Michael Gray, CPA
2190 Stokes St., Suite 102
San Jose, California 95128-4512
(408) 918-3162
Fax (408) 998-2766
email: mgray@taxtrimmers.com
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