Legal Resources For CPA’s & Tax Preparers
FOR TAX PROFESSIONALS REPRESENTING CLIENTS UNDER AUDIT
When a taxpayer is contacted for an IRS examination, the first natural response is to call the CPA or tax return preparer for help. The taxpayer needs to understand what is happening. The tax preparer wants to help and protect the client. So of course the tax accountant discusses speaking with IRS on behalf of his client. Here’s why.
- No one knows that tax return like the tax accountant who prepared it;
- We think the client expects the preparer to represent, maybe even for no additional fee;
- The preparer wants to protect both the client AND the relationship, from the unknown.
The return preparer begins representation, but is limited in ability to assist the client.
WHY INDEPENDENT REPRESENTATION FOR SUBSTANTIAL ISSUES?
Attorney Jeffrey Anton Collins understands the sensitive nature of large-dollar issues under exam.
The audit process begins with IRS gathering lots of information about the taxpayer. And yes, some of those audit questions are uncomfortable to answer. In fact, there are some questions the taxpayer should never answer. Certain sensitive questions should be answered by an experienced CPA or attorney. Why?
- If the taxpayer chooses not to answer any question, he/she is deemed uncooperative, and loses most opportunity for negotiation directly with the auditor.
- If the taxpayer chooses to answer a question untruthfully, he/she has possibly committed a federal tax crime and may be subject to criminal prosecution.
- The taxpayer may just provide key information that harmful to himself, or even expands the scope of the audit, or possibly incriminated him/her.
Here is a real world example: If client took an unsupported position on that tax return, the CPA can justify neither the position taken, nor justify the return that he prepared. This creates a direct client conflict during the audit. Because the CPA cannot speak about the deduction, he/she brings in the client to meet IRS. The client, in self-preservation says to the IRS, “My tax preparer said to file this way.” What’s worse, often the CPA is providing this additional service for almost no additional fee.
Plus, most state licensing boards, plus the IRS Circular 230 prohibit, or discourage your representing any matter that potentially conflicts with the interests of your client.
For significant issues, deductions, or unreported income, never represent a client for a return that your firm prepared. Refer a tax lawyer that you trust to provide independent representation. An experienced attorney’s job is to handle the audit, but also manage any communication that affects your relationship. Further, an experienced IRS attorney understands limits of the examining agent. A knowledgeable tax lawyer will ensure that IRS will not violate your rights as a taxpayer. And your tax attorney can defend the legal arguments that support you in the audit.
Remember, your client turned to you for help, not for representation. So help your client, and protect yourself. Refer a tax lawyer to handle any exam with exposure to substantial audit changes.
REFERRALS BY CPA’s AND TAX PROFESSIONALS
Attorney Jeffrey Collins works closely with CPA’s, Tax Professionals, and Attorneys. When you refer your client, our policy is to protect your relationship with your client. Your referrals may even create an opportunity to re-hire your additional services during the process.
We insist on transparency and communication with you, so that you can be advised during the process of any bankruptcy tax case, tax matter, or case in U.S. federal courts. And we provide accountability to both you and your client.
The Law Offices of Jeffrey Anton Collins appreciate your referrals. But much more importantly, we appreciate and respect your relationship.