Everyone knows that there is one word, in particular, they never want to read in a letter from the IRS: Audit.
This tiny-yet-frightening word means that something was wrong with your taxes. Not only that, but it was so wrong that the IRS insists on digging through your finances to discover exactly where the problem originated from.
There are multiple types of audits that may occur. In some cases, the issue may lie with the tax preparation service you chose. In others, it may be something that you accidentally missed or even actively avoided reporting. Regardless of the reason, it can be stressful having to deal with the IRS during an audit. Besides the worries of what’s coming, handling these issues alone mean hours or possibly even days away from your job or business.
You don’t want to lose that time, and you certainly don’t want to suffer from lost income. Instead of spending hundreds, perhaps thousands of dollars on a tax attorney during the emergency situation on an audit, it’s best to keep an attorney on retainer that offers tax audit protection. This gives you a major advantage when that scary letter comes in the mail.
What is Tax Audit Protection?
Tax audit protection is a program offered by a CPA (Certified Public Accountant) who is authorized to appear before the IRS in your defense during an audit. Typically, this program is something paid annually to the CPA who prepares your taxes. In basic terms, it’s a sort of insurance – You pay once a year each time you have your CPA prepare your taxes for submission to the IRS, and in return, should you be audited, they will stand in as your representation.
Why Do I Need Tax Audit Protection?
The scariest thing about a tax audit is that the letter you receive most likely won’t be written in language easily understood. The IRS is, above all, a legal entity that collects income taxes based on federal guidelines. As such, it makes perfect sense that an audit letter will be written in classic legalese: Difficult for the layperson to understand, and confusing without proper interpretation.
Tax franchises and standalone tax preparers may offer assistance with understanding what the IRS requires from you, but they are not able to directly speak to the IRS on your behalf. They may be able to give you some advice and help you get basic information together, but the fee that you paid for them to work up your tax forms won’t cover a tax attorney.
A CPA does have that authority, and often will offer affordable options to cover you in the case of a tax audit. They speak the language and know the ins and outs of business and personal taxes, and can help with filing the proper paperwork to correct the audit.
How Tax Audit Protection Can Save You Money
Imagine that you’ve received that letter. There it is, in big bold letters: AUDIT. You pick up the phone book and frantically look for a tax attorney. You call them, ask some questions, and feel your heart pound when they inform you that it can cost upwards of $100 an hour to even discuss your issues. That doesn’t include filing fees or actually going to court – this is just to sit down and go over your finances. Hiring a CPA and keeping them on retainer that includes tax audit preparation can cause as little as $150 a year, sometimes less. This can save you a lot of money when that unexpected letter hits your mailbox, and a lot of headaches as well. Defend yourself and your business with tax audit protection. It’s an easy way to ensure that you don’t have to stand alone against the IRS, and will bring you peace of mind should you ever undergo a tax audit.