Most IRS audits are done by mail and are relatively routine. The IRS sends a letter requesting additional documentation to support a deduction or other tax relief you have taken. If you return sufficient proof by mail, your case will be closed and no taxes are due. Otherwise, the IRS will send you an invoice in the mail.
However, if the IRS wants to meet with you, the stakes get much higher. In fiscal 2020, the average amount of additional fees recommended in face-to-face audits was nearly 10 times the average for a correspondence audit: $ 72,210 versus $ 7,658, according to statistics from the IRS.
Even tax professionals hire someone to represent them in face-to-face audits, says Leonard Wright, a certified public accountant and financial planner in San Diego. Wright has a lot of experience: he was the CFO of a company that was audited, and his personal tax returns have been audited four times. In each case, he hired another CPA to represent him.
It’s too easy to say something you shouldn’t say when you’re under surveillance, Wright says. You may come up with information that may not be helpful to you, or become defensive or confrontational.
“You don’t want it to get personal and you don’t want to ruffle the listener’s feathers,” Wright says.
If you have used a tax preparer, you can assume that this person can represent you during an audit, but this is not always the case. Typically, CPAs, attorneys, and registered agents can represent clients in IRS audits, but other tax professionals typically cannot. Your tax preparer may be able to refer you to someone who can represent you, or you may get referrals from friends, family, or financial advisers.