Who Can Act As My Business's Tax Representative at an IRS Audit?
Learn What You Need in a Representative for a Business Tax Audit
You've received an audit notice from the Internal Revenue Service and panic sets in. You don't want to deal with the matter without a tax representative by your side. You need to know who can represent you and your business at the audit meeting and in any future dealings with the IRS. If your case goes beyond the IRS, you'll need to consider who can represent you before a tax court.
The IRS says you need someone with experience at "practicing before the Internal Revenue Service." According to the IRS, this includes
"all matters connected with a presentation to the IRS on behalf of the taxpayer. Examples include preparing and filing documents, communicating with the IRS, and representing a client at meetings."
Who Qualifies as a Tax Representative?
Technically, anyone can practice before the IRS. You can appear on your own behalf or that of an immediate family member. Any of your full-time employees or -- if you've formed a partnership -- a general partner can represent your business. A bona fide officer or regular full-time employee of a corporation, association or organized group can represent these entities. An individual may represent any other individual or entity which is outside the U.S. before IRS personnel when this representation takes place outside the country.
You know what they say about fools representing themselves in court. With so much at stake, you won't want to entrust the future of your business to anyone less qualified than a tax professional or tax attorney.
Unenrolled Preparers as Tax Representatives
An unenrolled preparer is anyone you pay to prepare your business's tax return who is not a CPA, an attorney or an enrolled agent. He may only represent you with respect to a return he prepared before December 31, 2015. He can represent you before revenue agents and IRS customer service representatives, but not appeals officers, revenue officers or counsel. He can't sign any documents on your behalf.
The Best Tax Representatives at an Audit
You may not want your uncle or your full-time secretary appearing as your tax representative at an IRS audit, and with good cause, if they're not experienced and properly trained.
The best person to represent your business in tax matters is your CPA or your tax attorney, but ideally, you'll seek representation by an enrolled agent. This is an individual who is authorized by the federal government to represent taxpayers in audits, appeals, and collection matters. Enrolled agents aren't run-of-the-mill CPAs -- they specialize in taxation and the IRS grants them certain unlimited rights because they have either passed an IRS examination or they have worked for the IRS for at least five years in a role that involves interpreting and enforcing the tax code. They are subject to background checks.
Tax Representatives in Court
You have a right to go to tax court in most cases if an IRS audit produces an unfavorable result and you want to appeal the decision. Tax court is specifically devotedly to reviewing IRS matters, specifically tax deficiencies (you didn't pay as much tax as the IRS says you should have). You can take anyone with you or appear alone, but it's best to hire an experienced tax attorney who has appeared before this court before. The person who represents you must be an attorney who has been admitted to the bar for the Tax Court. You can have more than one person with you, but an experienced attorney will lead the team.