What Does IRS Audit Representation Cost
Question:
“What should a person expect to pay for Audit Representation?”
Answer:
There is no hard rule for the cost of representation. Look for these few things that affect the legal costs for audit representation:
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The quality of books and records could make the lawyer’s job easier, and therefore less expensive.
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Multiple years’ audits are not treated as multiple times the fees. The additional periods should not cost as much as the first year or period.
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This type of tax affects the cost. Sales tax audits, worker classification, and payroll tax audits are rightfully more expensive because they are considered sensitive matters and are often less well documented.
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There is a reasonable industry average for most audits. For example, specialty audits like “Tax Preparer Due Diligence” audits could range from $12,500 to $17,500.
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If accounting is necessary, let it happen. It will cost a few dollars, but your lawyer knows what is needed. Let it happen.
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Never trust flat fee representation. A flat fee suggests that your lawyer will stop working for you if the case gets too complicated. Expect estimated costs, with a reasonable arrangement for fee billing.
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Because the costs are estimated, the knowledge and reputation of the lawyer or representative matter in results but make no difference in your final overall cost in fees.
Get a Quote. Good tax attorneys will not charge you for a fee estimate.
IRS Audit Representation Cost, IRS Tax Attorney (Naperville IL)
If your audit has begun, and you already have a “Changes Report”, then you can compare your risk. Compare 1) the additional tax proposed by the auditor with 2) the lawyer’s estimated fees. Look for the cost of representation to be less than a third of the proposed additional tax. If those cases, you will know that your lawyer is thoughtful and has considered your Return on Investment.
On the other hand, if the costs are more than one-third, get feedback from the attorney or representative to see whether it is worth hiring representation.