Background

The role of tax practitioners has grown as tax law and IRS scrutiny have become more complex. In audits, a qualified practitioner helps translate law into evidence, communicate effectively with examiners, and pursue administrative remedies. The IRS recognizes representatives via Form 2848 (Power of Attorney), which formalizes who may speak for the taxpayer during an examination (IRS — About Form 2848).

When to add a tax practitioner

Add a practitioner as soon as one or more of the following apply:

  • You receive an audit notice you don’t understand or that requests complex records (e.g., business, rental, or international income).
  • The potential adjustment would create a material tax liability, penalty, or interest exposure.
  • Records are inconsistent, missing, or require legal interpretation (e.g., basis calculations, related‑party transactions).
  • You prefer professional representation for meetings, appeals, or settlement negotiations.

Early involvement preserves rights, shortens response times, and reduces the chance of making admissions that limit later defenses. The IRS’s examinations guidance itself describes procedures where representatives can act on a taxpayer’s behalf (IRS — Examination Procedures).

How engagement works (practical steps)

  1. Initial intake and scope: The practitioner reviews the audit notice and your records to identify issues and timeline.
  2. Documentation plan: They request and organize supporting documents (bank statements, ledgers, contracts, Form 1099s).
  3. Formal representation: If you want the practitioner to interact with the IRS, sign Form 2848 to grant authority.
  4. Strategy and negotiation: Practitioner prepares the response packet, attends interviews or office meetings, and negotiates proposed adjustments or offers of mitigation.

A clear engagement letter should define fees, scope (research only vs. full representation), and timing.

Real-world examples

  • Small business deductions: A client received an audit focused on advertising and travel expenses. Adding a CPA with small‑business experience allowed us to segregate deductible costs, present contemporaneous logs, and reduce an initially proposed adjustment by over 70%.

  • Investment losses: An individual with complex wash sale and basis issues retained an enrolled agent before the field audit. The agent reconstructed brokerage records, documented trade dates, and avoided a large penalty by showing reasonable cause.

Who benefits most

  • Business owners with multiple entities or employee payroll issues.
  • High‑income taxpayers or those with concentrated investments, real estate, or foreign income.
  • Taxpayers facing potential penalties, criminal referral, or complex legal issues.

Practical tips for working with a practitioner

  • Engage early: Contact a practitioner immediately after receiving the audit notice.
  • Provide a complete document set: Organized records shorten review time and reduce fees. See our guide on creating a digital audit file for a checklist and format tips (Creating a Digital Audit File).
  • Confirm credentials: Choose a CPA, Enrolled Agent (EA), or licensed tax attorney depending on the issue; attorneys handle privilege and criminal exposure.
  • Sign Form 2848 if you want full representation rights (IRS — Form 2848).
  • Discuss fee structure: Flat fee for a packet, hourly for meetings, or capped retainer for appeals.

Common audit triggers and recommended actions

Audit trigger Recommended action
High deductions relative to income Consult a practitioner to verify substantiation and prepare contemporaneous records
Business losses year over year Review profitability tests and prepare business purpose documentation
Unreported or mismatched income Reconcile 1099s/W‑2s and prepare corrected returns if needed
Inconsistent or incomplete records Reconstruct records with professional help; document reasonable cause

Common mistakes and misconceptions

  • Waiting to hire: Delaying engagement often reduces options and may increase penalties.
  • DIY representation without expertise: Self-representation can work for simple correspondence audits, but complex issues require professional judgment.
  • Confusing tax preparers with tax attorneys: Only attorneys can assert attorney–client privilege for communications in many contexts.

Related resources (internal links)

  • Preparing for an IRS office audit: Documentation, meetings, and best practices — practical steps a practitioner will use to build your case (/glossary/how-to-prepare-for-an-irs-office-audit-documentation-meetings-and-best-practices/).
  • When to engage an attorney instead of a tax preparer during an audit — guidance on privilege and criminal exposure (/glossary/when-to-engage-an-attorney-instead-of-a-tax-preparer-during-an-audit/).
  • How to prepare a professional audit response packet — a template many practitioners follow (/glossary/how-to-prepare-a-professional-audit-response-packet/).

Frequently asked questions

Q: Must I hire a practitioner for every audit?
A: No. Routine correspondence audits with straightforward requests can often be handled without representation. Hire a practitioner when legal interpretation, significant tax, or penalty exposure exists.

Q: Which credential is best?
A: CPAs and EAs specialize in tax practice and are suitable for most audits. Choose a tax attorney if you anticipate criminal exposure or need privilege protections.

Professional disclaimer

This article is educational only and does not replace personalized tax advice. Consult a licensed tax practitioner (CPA, EA, or tax attorney) for guidance specific to your facts and local law.

Authoritative sources

In my practice of 15 years representing taxpayers in audits, early engagement and clear documentation are the two most common factors that improve outcomes. If you’re preparing for an audit, prioritize a short strategy session with a qualified practitioner as your next step.