An audit is a document request with a deadline and an examiner who is building a file. What you send, and what you say, becomes the record. Our attorneys take over the communication through a power of attorney, decide what is produced and how, and handle the examiner, the appeal, and if necessary the Tax Court case.
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Three things. First, the IRS talks to us, not you: with Form 2848 on file the meetings happen at our office and the examiner’s questions come through counsel. Second, what you tell us is privileged; what you tell a preparer generally is not, and a preparer can be compelled to testify. Third, an audit is not the end of the process. Findings can be appealed, penalties can be removed, and a notice of deficiency can be petitioned to the Tax Court, where our attorneys are admitted.
Audits are also where civil matters become criminal ones. If there is something in the return you already know about, the first conversation should be with an attorney.
Income tax, business, Illinois sales tax, FBAR, and cryptocurrency audits, by correspondence or in the field. Our attorneys are admitted to the U.S. Tax Court, so the same team that handles the examination can appeal it and litigate it.
Most individual audits are correspondence audits about one or two items: a deduction, a credit, or income the IRS received a form for that the return did not show. The response is a reconciliation with documents, not a check. Field audits of higher-income returns cover multiple years and issues and are conducted by a revenue agent; those take place at our office, not your home.
Business audits examine income, expenses, payroll, and owner compensation, and they can reach the owners personally through the trust fund recovery penalty when payroll deposits were missed. We manage the document production so the examination stays within its scope, and we coordinate with your accountant or with Gordon Tax for the books.
The Illinois Department of Revenue audits restaurants, retailers, liquor stores, and online sellers, reconstructing sales from purchase records and industry markups. The reconstruction can overstate sales substantially, and challenging the method early is where these audits are won. Sales tax audits
An FBAR examination decides whether a failure to report foreign accounts was willful, which is the difference between a manageable penalty and one measured in half the account balance. The answers given in the examination are the evidence on that question. FBAR
Crypto audits begin with a mismatch between broker reporting and the return, or with summons data, and they ask for every wallet and exchange you have controlled. Missing basis is treated as zero. We reconstruct the records under privilege before anything is produced. Crypto audit defense
The firm’s office is in Skokie, outside Chicago, and we appear before the IRS and the Illinois Department of Revenue for Illinois taxpayers regularly. For federal matters, location does not limit representation; we represent clients in all 50 states.
The government is cracking down, and FBAR audits are on the rise. International assets and offshore disclosures can make your IRS audit much more complicated; it’s important to understand the unique challenges and complexities of an FBAR audit.
Navigating a tax audit can seem intimidating, but it doesn’t have to be a stressful ordeal. With the right knowledge and preparation, anyone can handle this process smoothly.
The IRS has begun a new wave of audits targeting high-earning individuals and partnerships. Here’s how you can prepare.
These are some of the top IRS audit triggers that could cause a closer look at your return. See our IRS Audit Survival Guide for more info.
Most selections are automated: income reported by third parties that does not match the return, deductions or credits out of proportion to income, business losses several years in a row, foreign account or crypto indicators, or a related party under examination. Some are random. The letter names the items under review, which tells you most of what you need to know about why.
Sometimes it is a document request that closes with a small adjustment, and sometimes it is the first step toward a large assessment or a criminal referral. The difference is usually what is in the return, not the audit itself. It should be taken seriously from the first letter, because the early responses set the tone for everything after.
A real audit begins with a letter, usually Letter 2205 or Letter 566, stating the tax year, the items under review, the documents requested, and a deadline. It arrives by mail. The IRS does not open audits by phone, email, or text; anyone doing so is not the IRS.
Note the deadline, do not call the examiner, and do not send anything yet. Gather the return and the records for the items listed, and talk to an attorney before you respond. If there is something in the return you already know is a problem, that conversation needs to happen under privilege.
The examiner requests documents, reviews them, may ask questions or interview you, and issues a report proposing changes. You can agree, or dispute the report to the IRS Independent Office of Appeals within 30 days, and if that fails, petition the Tax Court within 90 days of the notice of deficiency. With representation, the interview and the meetings happen through your attorney.
Attorneys, CPAs, and enrolled agents can all represent taxpayers before the IRS with a power of attorney. Only an attorney offers attorney-client privilege, and only an attorney can represent you in Tax Court if the audit gets there.
Not always. A correspondence audit about a single documented deduction may need nothing more than the documents. You need a lawyer when the amount is significant, when the return has a problem you know about, when foreign accounts or crypto are involved, when the audit is in the field, or when the examiner has started asking about intent.
It depends on the scope: a correspondence audit on one item is a different engagement from a multi-year field audit with an appeal. In the consultation the attorney reviews the letter, explains what the audit is likely to involve, and quotes the engagement so you can decide with the numbers in front of you.
IRS letters, audits, unreported years, returns.
Foreign accounts, expats, offshore disclosure.
Audits, tax debt, criminal exposure, Tax Court.
Written analysis at a stated confidence level.
Asset protection for individuals and businesses; private company deals.
Attorney-reviewed returns and planning.
