IRS Audit Attorney

With more than a decade of legal, business, and tax experience, the team at Milikowsky Tax Law is on hand to help defend your business in an IRS audit.

There are few things more threatening to a business owner than a letter from the IRS.

An audit can be a time-consuming process. While you cannot avoid a tax audit, you can minimize your risk of an audit by avoiding potential flags on their tax return. The most frequent IRS audits are caused by inconsistencies or errors in your tax return that raise red flags in the eyes of the IRS.

When you work with Milikowsky Tax Law, you get more than an experienced tax litigation attorney. You get an experienced business and tax advisor who can work with you to reduce your chances of being audited, with our comprehensive tax return assessment system and years of business experience.

California’s Top IRS Audit Attorney

Our leading tax litigation attorney, John Milikowsky, has decades of experience representing countless businesses in legal tax matters. Mr. Milikowsky is dedicated to relentlessly defending his clients in everything from state and federal tax audits to criminal tax investigations. As a full-service tax law firm, we frequently work with business owners to empower owners to identify issues on their own tax returns. While there is no way to guarantee you will avoid a tax audit, we can teach you to significantly minimize your risk of an audit.

Milikowsky Tax Law Defends Businesses in IRS Audits

When you’re faced with the formidable presence of a tax audit, don’t panic. Reach out to Milikowsky Tax Law, and we will protect your company to keep your business in business. Our skilled tax litigation attorneys will protect your rights every step of the way.

Whether you’ve just received a letter from the IRS, or you need help analyzing your legal rights and financial data reported on your tax returns, contact us today. The team at Milikowsky Tax Law is here to help.

San Diego Tax Attorney – Your Relentless Advocate in IRS Audits

Business owners may not be sure where to start if IRS audits their company. However, an IRS audit doesn’t have to overwhelm your life or impede your ability to conduct business. With the experienced team at Milikwosky Tax Law, you can navigate the process of an IRS audit secure in the knowledge that your tax attorneys are advocating for you every day.

There is little to no margin for error during an audit, a tight timetable, and potentially severe consequences for a poorly handled interaction with IRS. Unlike CPAs who do not have attorney-client privilege, attorneys are able to speak with your IRS officer on your behalf without risk of subpoena or summons of records discussed.  A qualified attorney can, review your documents with an expert eye, create the right strategy for you, represent you or your business, and provide valuable advice and guidance.

If you receive a letter from IRS confirming your business tax return has been selected for examination, review your return and identify the items that will likely be investigated so you can be prepared. Then, before communicating with IRS, reach out to an experienced IRS audit attorney. Having a game plan is critical. You want to be honest and prepared when speaking with your IRS revenue agent.

Anytime you file taxes, there is a chance that your tax return might be audited by the Internal Revenue Service (IRS). The agency conducts standard procedures to find any errors or discrepancies among taxpayers. The audit process is meticulous and, should you find yourself under the scrutiny of IRS, will require detailed information from you. 

In the article below, you’ll learn about the audit process and frequently asked questions surrounding IRS audits.

Why was I selected for an IRS Audit?

There are different reasons you may be flagged for IRS audits. Some are due to random checks; however, you have a low chance of being audited this way. Most taxpayers have less than a 0.6% chance of receiving a random audit check. 

IRS runs tax returns through its Discriminant Information Function (DIF) system to continually update their database and make sure they are tracking industry benchmarks for each industry and tax bracket. 

The DIF system also checks for incorrect tax filing information. Any discrepancies in tax forms, such as an imbalance of tax returns, a discrepancy between reported earnings and employer filings, or unreported cash transactions by one member of a transactional party, will trigger DIF to send your return to an IRS audit officer. 

People are more susceptible to an audit if they:

  • Earn less than $25,000 or more than $500,000
  • File incorrect or incomplete returns 
  • Have large numbers of cash transactions 
  • Claim a disproportionate number of deductions 
  • Are self-employed
  • Have a home-based business
  • Have a cash business 
  • Have foreign assets 

Sometimes you can be audited as a result of your business partners or investors going through an audit. 

How Will I Know If I am Selected for an Audit?

You will know if you are selected for an audit if you receive a verified letter in the mail from IRS. They do not call to notify you about your audit. 

What Do I Do If I’m selected for an Audit?

If you or your business are selected for an audit, make sure you read all of the information sent to you in your audit notification letter.  The letter and accompanying information request packet will notify you as to what entity is being audited (business or personal) what year(s) are under review and who your auditor is. Once you know what IRS needs, make sure you collect all of the records and supporting documentation requested (but nothing additional). You will need to submit records from banks, vendors, and businesses you have worked with, invoices and pay stubs, payroll records, and medical expenses among other information.

Should I Hire an IRS Tax Attorney to Help Me?

We suggest contacting a qualified tax attorney to help guide you through your audit, to ensure you are timely, responsive, compliant, and do not unintentionally increase the scope of your audit to other areas of your business or personal finances that would otherwise remain unscrutinized.. There is little to no margin for error during an audit, a tight timetable, and potentially severe consequences to a poorly handled interaction with IRS. Unlike CPAs who do not have attorney-client privilege, attorneys are able to speak with your IRS officer on your behalf without risk of subpoena or summons of records discussed.  A qualified attorney can, review your documents with an expert eye, create the right strategy for you, represent you or your business, and provide valuable advice and guidance. 

How long do I have to reply to an IRS audit?

You have 30 days to reply to the initial audit letter. Do not hesitate, and make sure you take the appropriate steps early on. IRS is not likely to provide extensions unless you have a good reason.  Your attorney can help by advocating for more time with the IRS agent.  A good attorney will know many of your local IRS auditors and have strong relationships built on well-structured prior cases and mutual respect. 

How Long Do Audits Take?

The time it takes to conduct an audit depends on the case. It fluctuates depending on:

  • The seriousness of the tax reporting error
  • When and whether the right information is provided to IRS
  • Communication between the person being audited and IRS officer

How Many Years of Tax Returns Can IRS audit?

IRS audits tax returns from the past three years; however, most are from the past two years. Only when IRS agents find discrepancies within the audit they are conducting do they dig for information older than three years. Most audits do not look for information past six years. Though in cases of criminal audits IRS can look back 9 years and longer. 

If you or someone you know received an audit letter from IRS, reach out to our expert team at Milikowsky Tax Law. We have over a decade of experience working with IRS and tax audits and are experts in defending business owners in the face of IRS or other government agency audits. 

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How to Prepare for an IRS Audit in 2025: A Comprehensive Guide

Preparing for an IRS audit can be a daunting task, but with the right strategies and tools, you can navigate the process smoothly and confidently. As we approach 2025, it’s important to stay ahead of potential changes in tax regulations and audit practices. 

Read on to learn more about how to prepare for an IRS audit in 2025. 

1. Understand the IRS Audit Process

The first step in preparing for an IRS audit is understanding how the process works. An audit is a review of your tax return and supporting documents to ensure that your reported income, deductions, and credits are accurate and comply with tax laws. The IRS can conduct audits through various methods:

  • Mail Audits: The IRS requests additional information or documentation via mail.
  • Office Audits: You visit an IRS office to provide documentation and answer questions.
  • Field Audits: An IRS agent visits your home or business to review records and discuss your tax return in person.

2. Stay Informed About Tax Law Changes

Tax laws and regulations are frequently updated, and staying informed is crucial to ensure compliance. As we move into 2025, be aware of the following:

  • New Tax Legislation: Monitor any new laws that could impact your tax situation, such as changes in tax rates, deductions, or credits.
  • IRS Guidance: Review IRS publications and updates to stay current on any changes in audit procedures or reporting requirements.
  • Industry News: Subscribe to industry newsletters and consult with tax professionals who can provide insights into upcoming tax law changes.

Being proactive about these updates helps you address any potential issues before they become problems during an audit.

3. Organize Your Financial Records

Effective organization of your financial records is crucial for a smooth audit process. Follow these steps to ensure your records are complete and easily accessible:

  • Tax Returns: Keep copies of your filed tax returns for at least three years. This includes all supporting schedules and attachments.
  • Receipts and Invoices: Gather and categorize all receipts, invoices, and proof of expenses. Use accounting software to help with organization.
  • Bank Statements: Ensure that your bank statements match the reported income and expenses. Reconcile statements regularly to catch any discrepancies early.
  • Payroll Records: If applicable, organize payroll records, tax withholdings, and other employee-related documents.

4. Review Your Tax Returns

Thoroughly review your tax returns to identify any discrepancies or errors. Here’s how to approach this review:

  • Cross-Check Information: Verify that all income sources are accurately reported and that deductions and credits are claimed correctly.
  • Look for Inconsistencies: Check for inconsistencies between reported figures and supporting documents, such as W-2s and 1099s.
  • Correct Mistakes: If you identify any errors, consider filing an amended return to correct them before the IRS initiates an audit.

A proactive review of your tax returns helps prevent potential issues and demonstrates your commitment to accuracy.

5. Understand Common Audit Triggers

Certain factors can increase the likelihood of an audit. Being aware of these triggers allows you to address potential issues before they attract IRS attention. Common audit triggers include:

  • Large Deductions: Claiming unusually high deductions compared to your income can raise red flags.
  • Inconsistencies: Discrepancies between reported income and third-party information, such as from employers or financial institutions.
  • Unreported Income: Failing to report all sources of income, including freelance or side gig earnings.

Addressing these triggers by ensuring accurate and complete reporting helps minimize the risk of an audit.

For more information, check out our guide to common audit triggers, here.

6. Consult with a Tax Professional

Engaging a tax professional can provide valuable assistance during an audit. Here’s how a tax professional can help:

  • Expert Guidance: A tax professional can help you understand your rights, gather necessary documentation, and navigate the audit process.
  • Representation: They can represent you during the audit, communicate with the IRS on your behalf, and negotiate any issues that arise.
  • Audit Preparation: Tax professionals can assist with organizing records, reviewing returns, and preparing for the audit meeting.

Choose a tax professional with experience in handling IRS audits to ensure you receive expert guidance tailored to your situation.

7. Prepare for the Audit Meeting

If your audit requires an in-person meeting, preparation is key. Be ready to present organized documentation and provide clear explanations for any discrepancies. Ensure that you:

  • Have All Documents: Bring all requested documents and any additional supporting evidence.
  • Be Honest and Accurate: Provide truthful and accurate information.
  • Stay Calm and Professional: Maintain a professional demeanor and avoid being defensive.

8. Respond Promptly to IRS Requests

During an audit, the IRS may request additional information or clarification. Respond to these requests promptly and thoroughly:

  • Timely Submission: Submit requested documents and information by the deadlines provided. Delays can extend the audit process.
  • Complete Responses: Provide complete and accurate responses to avoid further inquiries or complications.

Prompt and thorough responses demonstrate your willingness to cooperate and can help expedite the audit process

9. Understand Your Rights

During an audit, you have certain rights, including:

  • The Right to Professional Representation: You can have a tax professional represent you.
  • The Right to Appeal: If you disagree with the audit findings, you can appeal the decision.

Familiarize yourself with these rights to ensure that you are treated fairly throughout the audit process.

10. Implement Best Practices for Future Tax Filings

After the audit, use the experience to improve your tax practices and reduce the risk of future audits. Consider the following best practices:

  • Accurate Record-Keeping: Maintain accurate and complete financial records to support your tax filings.
  • Regular Reconciliation: Reconcile your accounts monthly to catch discrepancies and errors early.
  • Effective Communication: Foster open communication between your accounting team and tax preparers to address potential issues proactively.
  • Ongoing Education: Stay informed about changes in tax laws and regulations to ensure compliance.

By implementing these best practices, you can enhance your financial management and minimize the risk of future audits.

Final Notes

Preparing for an IRS audit in 2025 involves understanding the audit process, staying informed about tax law changes, organizing your financial records, and consulting with a tax professional. By taking these steps, you can ensure a smoother audit experience and better manage any potential issues that arise.

For more personalized advice and assistance, consider reaching out to a tax professional who can guide you through the preparation and audit process. Stay proactive, stay informed, and ensure your financial records are in order to navigate the audit with confidence.

At Milikowsky Tax Law, we have over a decade of experience working with IRS and tax audits. We’re experts in defending business owners in the face of IRS or other government agency audits.

Interested in learning more? Read on to learn how to respond to an IRS audit.