Along with needles, public speaking and death, most people fear tax audits also. However, there is no reason to be scared as paperless audit software solutions are available that provide cheap or free audit assistance. In this article, we give you useful information on how your tax software product’s IRS audit help works.
Difference between ‘audit representation’ and ‘audit guidance’
Guidance is also called support or assistance. It aids you to comprehend what’s happening. In contrast, “representation” means a tax expert will talk to the IRS about your tax situation.A lot of tax software vendors provide free guidance. Representation is typically an add-on product that costs $20 to $50. This is a good deal in case you‘re audited as it is expensive to hire a tax attorney to represent you. For instance, tax experts charge about $129 on average to craft an IRS audit response letter on your behalf and $150 an hour to represent you in person during the audit. Further, the median retainer cost of a tax lawyer is $770 as per the National Society of Accountants.
Third-Party Help
Tax software vendors mainly focus on product development and hence may outsource the IRS audit help package to a third-party partner. If you get an IRS notice, you need to contact the audit assistance provider who’ll verify your coverage. Then, you need to give copies of your filed tax return and the IRS letter to them. If you want representation, you should sign a document authorizing a tax expert to represent your case to the IRS.Ask for a Specific Attorney
You should make sure to ask that a specific expert represents you. Depending on the audit’s nature and the provider, your representative could be located in a different city. This means you need to interact with them mainly via secure data website, phone and email. Or the provider may allot you a local representative who will consult with you in person.No Freebies
Audit protection will not remove taxes you may owe legitimately or make your audit go away. You’ll still be held responsible for what you reported in your return. So don’t take the liberty of exaggerating or stretching your tax reporting simply because you purchased an audit package. The facility cannot perform any magic for you. For instance, if you do not possess documentation that supports the deductions questioned by the IRS, your audit protection package cannot change that.There May Be No Need for It
Your coverage for a particular tax return will be active for the time your return is auditable which is generally 3 years. For instance, if you purchased coverage for your tax return in 2019, but the IRS audits it only in 2018, your 2016 tax return coverage will still be valid.However, you need not feel any anxiety about audits as in any given year the IRS audits only a negligible percentage of all returns filed by individuals. This percentage is lower for income amounts up to $200,000. However, if you are still haunted by audit worries, you should learn more about the coverage features offered by your tax solution. If the IRS does select you for an audit, you can save a lot of hassle, time and money attempting to handle it yourself.
