IRS Audit Defense and Audit Representation

That is the part most people get wrong. They answer the letter themselves, send more than was asked for, and hand the examiner a reason to widen the scope. Levy & Associates handles audits from the notice through the examination, through Appeals if it goes that far, and through whatever balance is left at the end, including unfiled and back tax returns if missing years surface along the way. Our attorneys, CPAs, Enrolled Agents, and former IRS Revenue Officers do this work every week.

Our audit practice is civil. Levy & Associates does not represent clients in criminal tax matters of any kind. If an examination moves toward potential criminal exposure, we will tell you directly and refer you to criminal counsel.

What Audit Defense Actually Means

Audit defense, also called audit representation, is a service in which a credentialed professional represents you during an examination. You sign a power of attorney on Form 2848, and from that point the IRS deals with your representative rather than with you.

That is a bigger difference than it sounds. Your representative decides what gets produced and when, answers the examiner’s questions, controls the scope of the conversation, and keeps you from volunteering information that opens a new line of inquiry. Taxpayers who represent themselves tend to over-disclose, not because they are careless, but because they are trying to help someone whose job is to find adjustments.

Be careful with the word “defense,” though, because two different products share it.

Prepaid Audit Protection Is Not Audit Representation

When you file with consumer tax software, you are usually offered an add-on with a name like audit defense or audit protection. It is worth understanding what you bought.

	Prepaid audit protection	Full audit representation
What you get	Guidance, letter templates, help understanding the notice, sometimes limited correspondence	A credentialed representative who acts for you under a power of attorney
Who handles the IRS	Usually you, with coaching	Your representative, directly
Scope	Typically the single return and tax year covered by the plan	The full examination, including years the IRS adds
Appeals	Usually excluded	Included where warranted
Collection afterward	Almost always excluded	Handled as part of the same matter
Bought	Before you know you have a problem	After the notice arrives

 

Neither one reduces your chance of being audited. Buying protection in advance doesn’t affect whether the IRS selects your return.

Prepaid protection is not worthless. For a simple W-2 return with a correspondence notice about one line item, it may be all you need. It becomes a poor fit fast once there is a business, a Schedule C, rental property, a field examination, or a balance at the end. We go deeper on the distinction in our guide to audit protection plans.

The Three Kinds of IRS Audit

Not all audits are the same, and the type tells you a lot about what is coming.

Type	How it arrives	What it usually covers	What it typically means
Correspondence	By mail, no in-person meeting	One or two specific line items, often a document match	The most common type by a wide margin. Handled entirely on paper
Office	A letter asking you to come to an IRS office	Several issues, more documentation, an interview	The examiner has questions that a letter exchange will not settle
Field	An examiner comes to your home, business, or representative’s office	The full return, sometimes multiple years and related entities	The most serious. Field examinations are assigned to revenue agents and generally signal a larger or more complex case

 

A poorly answered correspondence audit can turn into an office audit. That escalation path is the best argument for involving representation before the first response goes out, not after.

For a deeper breakdown, see our guides on what triggers an IRS audit and the types of IRS audits.

How Far Back the IRS Can Reach

The examination window runs off the assessment statute of limitations in IRC 6501.

Situation	How far back
Standard	3 years from the date the return was filed, or the due date if filed early
Income understated by more than 25 percent of gross income shown	6 years
No return filed	No limit
False or fraudulent return	No limit

 

Two practical notes. Examiners routinely ask taxpayers to sign Form 872 extending the assessment period. Signing is often the right call, and sometimes it isn’t, but you should never sign reflexively. And an audit of one year that turns up a pattern frequently expands into adjacent years, which is why the scope conversation matters early.

Our guide on how far back an IRS audit can go covers the exceptions in more detail.

The Deadlines That Decide Your Case

Almost every bad audit outcome we see traces back to a missed date rather than a weak set of facts. These are the ones that matter.

Notice	What it is	Your window
Information Document Request (Form 4564)	The examiner’s request for records	Set by the examiner, usually short, and extendable if you ask before it lapses
30-day letter	The examination report with proposed adjustments	30 days to file a written protest and take the case to the IRS Independent Office of Appeals
90-day letter, formally a Statutory Notice of Deficiency under IRC 6212	The IRS’s formal determination that you owe	90 days to petition the United States Tax Court, or 150 days if the notice is addressed outside the country. This deadline cannot be extended

 

The 90-day letter is the one to understand. File a petition with the Tax Court within that window, and you can dispute the liability before paying anything. Let it lapse, and the tax is assessed, collection begins, and your remaining options narrow to paying first and suing for a refund, or asking for audit reconsideration, which the IRS grants at its discretion rather than as a right.

Appeals are worth using. It is independent of the examination function, and a protest that reframes the facts before a fresh reviewer resolves a substantial share of disputes without litigation. Where the amount in dispute is $25,000 or less for the period, a small case request on Form 12203 gets you there with far less procedure.

Who Is Allowed to Represent You

Federal law governs this, not where you live.

Under Treasury Department Circular 230, three categories of professionals hold unlimited practice rights before the IRS: attorneys, Certified Public Accountants, and Enrolled Agents. Any of the three can represent you in an examination, before Appeals, and in collections, in any state, regardless of where they are admitted or licensed. Enrolled Agents are credentialed by the IRS itself, either by examination or through qualifying service at the agency.

A preparer with only a PTIN and no credential does not have those rights. Neither does a bookkeeper, and neither does the person who sold you the software add-on.

Our attorneys are licensed in Michigan. Because IRS representation runs on Circular 230 rather than on state bar admission, we handle federal examinations for clients nationwide. Where a matter needs counsel admitted in another state, we will say so.

What Our Team Brings to an Examination

Some of our staff spent years as IRS Revenue Officers before joining this firm. That is not a marketing line; it is a working advantage: they know how an examination file is assembled, which explanations an examiner will accept without escalating, what triggers a referral, and where there is genuine room to move. You can read more on our former IRS Revenue Officers page.

Here is how a matter actually runs.

We read the notice and calendar every date. Half the value of calling early is that nothing lapses.

We file Form 2848, and the IRS stops calling you. For most clients, this alone changes the experience.

We find out what the examiner is really looking at before producing anything. An Information Document Request is a starting position, not a subpoena.

We assemble and produce the records; where documentation is missing, we reconstruct what we can and build a reasonable substantiation argument for the rest.

We attend the meetings. You generally do not need to be there.

We protest to Appeals when the examination report is wrong, and we handle whatever comes after: an installment agreement, penalty abatement, an offer in compromise, or a hold on collection.

If the Audit Ends With a Balance

An adjustment is not the end of the matter. Once the tax is assessed, the same file moves to collection, and the options are the ones you would expect: an installment agreement, Currently Not Collectible status or an offer in compromise, penalty abatement where there is reasonable cause, or release of a lien or levy that has already attached. Because we handle both halves, nothing gets handed to a different firm at the point where the pressure actually starts.

Failure-to-pay and accuracy-related penalties are frequently abatable. The accuracy-related penalty under IRC 6662 runs at 20 percent of the underpayment, often the largest single line on an examination report and one of the most negotiable.

State Audits Are a Separate Process

A federal audit and a state audit are different matters on different clocks, and confusing the two costs people their appeal rights.

Michigan Department of Treasury. Michigan generally has four years to assess under MCL 205.27a, not the federal three. The sequence matters:

• A Notice of Intent to Assess starts a 60-day window to request an informal conference with the Treasury Hearings Division, using Form 5713.
• The conference produces a Decision and Order of Determination and, if the adjustment stands, a Final Assessment.
• From the Final Assessment, you have 60 days to appeal to the Michigan Tax Tribunal, or 90 days to file in the Michigan Court of Claims, under MCL 205.22.
• The uncontested portion of the assessment has to be paid before you can appeal the contested portion.

You may also skip the informal conference and go straight to the Tribunal or the Court of Claims. Whether that is wise depends on the facts, and you should decide deliberately rather than letting the first deadline pass. Michigan practice is covered further on our Michigan tax attorney page and in our guide to navigating an IRS or state audit in Michigan.

Florida Department of Revenue. Florida has no individual income tax, so the audit exposure is overwhelmingly sales and use tax. The Department generally has three years to assess; the clock can be tolled when it issues a formal Notice of Intent to Audit, and there is no limit where a business never filed for a period or filed fraudulently. Contested assessments go through an informal protest with the Department and, if that fails, a formal hearing before the Florida Division of Administrative Hearings. None of that matches the IRS process, and a federal resolution does not resolve a Florida liability. See our Florida tax attorney page.

ERC Audits Are Their Own Category

Employee Retention Credit claims have drawn concentrated IRS attention, and these examinations differ from a standard audit: questions focus on eligibility, the documentation standard is demanding, and the exposure includes repayment of the credit plus penalties and interest. If your business claimed the ERC and has heard from the IRS, start with our ERC audit defense page.

Is Audit Defense Worth It

Depends on what you are facing, and we would rather tell you than sell you.

Probably not worth hiring anyone: a correspondence notice about a single missing 1099, where you have the document and the fix is arithmetic. Send the paperwork.

Worth a conversation: any notice involving a Schedule C, rental property, a large or unusual deduction, several years, cash-intensive operations, cryptocurrency, or an amount that would genuinely hurt to pay.

Worth representation without much debate: a field audit, any examination touching payroll taxes, an ERC claim under review, an examination the IRS has expanded to additional years, a state audit running alongside a federal one, or a 30-day letter you disagree with.

The rough test is whether the proposed adjustment exceeds what representation costs, and whether the issue is documentary or judgmental. Documentary problems get solved by producing records. Judgmental problems get solved by argument, and argument is where representation earns its fee.

Related Guides

• IRS audit versus review: what is the difference
• How often can the IRS audit me
• What records do I need if I am audited
• What is a civil tax audit
• How to prepare my small business for an audit
• Tax audits: what to expect from the process

Frequently Asked Questions

What is the difference between audit defense and audit protection?

They are usually different products. Audit protection is typically a prepaid plan sold with tax software that gives you guidance, templates, and help understanding a notice, while you still deal with the IRS yourself. Audit defense, in the sense a tax firm means it, is full representation: a credentialed professional files a power of attorney and handles the examination in your place, including Appeals. Neither one lowers your odds of being selected. The difference shows up once the examination becomes anything more complicated than a single line item.

Does hiring a representative make the IRS think I have something to hide?

No. Representation is a statutory right, and examiners deal with representatives constantly. Publication 1, Your Rights as a Taxpayer, explains your right to retain one. In practice, an examiner often prefers working with a professional, because the records arrive organized and the conversation stays on the issues.

How long does an IRS audit take?

A correspondence audit can close in a few months. An office audit typically runs longer. A field examination of a business, especially one covering multiple years or related entities, can run well past a year, and Appeals adds more time. Responding on time is the single biggest factor you control, because missed deadlines turn a manageable examination into a long one.

What happens if I miss the 30-day letter deadline?

You lose the direct route from the examination to the IRS Independent Office of Appeals, and the IRS will generally issue a Statutory Notice of Deficiency, the 90-day letter. That notice gives you 90 days to petition the United States Tax Court, or 150 days if it is addressed outside the country, and that deadline cannot be extended. If both windows lapse, the IRS assesses the tax and begins collection. Audit reconsideration may still be available, but the IRS grants it at its discretion rather than as a matter of right, so it is a weaker position than the one you started in.

Can an audit turn into a criminal case?

It is uncommon, and most examinations are civil from start to finish. It can happen when an examiner sees indicators of fraud rather than error, in which case the examiner may refer the case to IRS Criminal Investigation. To be direct about our scope: Levy & Associates handles civil tax matters only and does not represent clients in criminal tax matters of any kind. If we see an examination heading that direction, we will tell you plainly and refer you to criminal counsel rather than take a case we are not the right firm to handle.

Talk to Someone Before You Answer That Notice

If you have an IRS or state audit notice in front of you, the best first step is to have someone read it before you respond. Deadlines on these letters are short, and your response sets the tone for everything that follows.

Our attorneys, CPAs, Enrolled Agents, and former IRS Revenue Officers handle examinations from the first notice through Appeals and any remaining balance. 

Call 248-557-4048 for a confidential conversation or contact us online.