IRS Audit Defense & Representation
An IRS audit notice is not a conversation starter; it is the opening move in a process governed by the Internal Revenue Manual, the tax code, and case law. Valley Tax Law represents California taxpayers in correspondence audits, office audits, field audits, and the appeals that follow.
The single most common mistake in an audit is the taxpayer talking directly to the examiner. A licensed tax attorney can stand between you and the IRS using Form 2848, Power of Attorney, which means you do not answer questions, you do not produce documents, and you do not give the examiner ammunition they would not otherwise have.
The Three Types of IRS Audits
Correspondence Audit: conducted entirely by mail. Usually focused on a single issue like the Earned Income Credit, charitable contributions, or unreported income from a 1099. Most common audit type.
Office Audit: conducted at a local IRS office. Generally covers two or three issues and requires the taxpayer to bring substantiating records. Often used for sole proprietors, rental property owners, and itemized deduction questions.
Field Audit: conducted at the taxpayer's home, business, or representative's office. Most comprehensive type, used for complex returns, businesses, and high-net-worth taxpayers. Field auditors are revenue agents with significant authority and time.
What Triggers an Audit
The IRS Discriminant Function (DIF) score statistically flags returns with unusual ratios or amounts. Common triggers include high Schedule C deductions relative to income, large casualty losses, home office deductions for employees, cryptocurrency transactions, foreign accounts, and high-income returns generally.
Matching programs flag returns that omit income reported on Forms W-2, 1099, K-1, and 1098. Cash-intensive businesses, the gig economy, and pass-through entities all see elevated audit rates. Some audits are random, selected through the National Research Program.
Your Rights During an Audit
Right to representation: you can be represented by a tax attorney, CPA, or enrolled agent at every stage. The IRS must suspend the interview if you indicate you want representation.
Right to privacy and confidentiality: the IRS cannot investigate beyond the scope of what is relevant to the audit issues.
Right to appeal: every audit decision can be appealed administratively, and most can also be challenged in Tax Court without first paying the deficiency.
Right to know why information is requested and what will be done with it. The Internal Revenue Service Restructuring and Reform Act of 1998 codified the Taxpayer Bill of Rights, which the IRS is required to follow.
Why Representation Matters
Examiners are evaluated on adjustment dollars. The more they propose, the better their internal metrics look. A represented taxpayer creates immediate friction with that incentive because every adjustment now has to survive legal scrutiny before becoming an assessment.
Beyond the adjustment dynamic, an attorney controls the scope. Examiners often ask wide-ranging questions hoping to expand the audit into new years or issues. Counsel narrows the questions back to what the original notice authorized.
Serving California Communities
Valley Tax Law represents clients throughout the Central Valley and Central Coast. Schedule a consultation at any of our offices, or by phone.
Talk to a real tax attorney. No retainer. No pressure. No more sleepless nights.
The hardest part is picking up the phone. After that, we take it from here. Free, confidential, and protected by attorney-client privilege.