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Do You Have Any RIGHTS During An Audit?-YES!

August 21, 2012

Tax audits are probably the most frightening thing for a taxpayer to experience. There are two big advantages that the taxpayer has over the Service (IRS) in the audit. First , the taxpayer usually knows more that the Service about any given item. Second, no matter what the issue, the taxpayer should be able to present the facts in an orderly and compelling manner. The Service, on the other hand, merely serves an abstract goal: protecting the Treasury. Most examiners, just like anyone else, are more partial to real people with real stories that they are to abstract goals. I’ve represented clients in audits where the examiner sat down and said “let’s make a deal, you give me this and I’ll give you that…” I, of course, was like “oh no you dit-ten.” (Didn’t for those that “dit-ten” get it. LOL) But audits can be just like a negotiation and some can be more heartfelt. At Gunwel Associates we prefer to represent the client in an audit rather than you sit there and sweat it out by yourself. You do have rights during the examination and I wanted to explain what they were in the event you dealt with an audit on your own.

Various statues, including the three Taxpayer Bills of Rights (now part of the Internal Revenue Code), regulations, other guidance, and the manual provide taxpayers with a number of rights during the audit process. these include:

  • A right to an explanation of the audit process;
  • The right that certain information be provided to taxpayers when a Service employee contacts them in any manner;
  • A right to have the examination at a specified, reasonable time and place for the taxpayer and its advisors;
  • A right to representation, or to consult an authorized representative, during interviews by the Service;
  • A right to have communications to all tax practitioners who are authorized to represent the taxpayer before the Service be held confidential;
  • A right to be notified of the service of summons on a third-party and the opportunity to petition to quash such a summons;
  • The right to receive advance notice from the Service of its intent to make third-party contacts on a periodic basis;
  • A right to record any interview with the Service;
  • A right to present witnesses; and
  • The right to have an independent appeals function review the taxpayer’s case, including a prohibition of ex parte communication between appeals officers and other Service employees.

All of these rights are subject to limitations, but most of them are backed up by administrative or judicial remedies available to the taxpayer, such as a cause of action under 7433 for wrongful collection actions.

The tax gap is at a staggering $450 billion. Briefly, the tax gap is  measured by the difference between the tax owed by taxpayers and what is actually collected by the Treasury. Certainly this is not a situation that the IRS can audit its way out of. There isn’t enough money in the govt’s budget to go get it all. When you consider that about one percent of all returns that are filed are audited that’s hard to believe. We certainly don’t want that to change…and we certainly don’t want to be audited…but if you get that notice give us a call at 615-730-9444 as Gunwel Associates wants to help. You work hard for your money, let us work smart to help you keep it! Call or visit our website at See you soon!

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