IRS Practice Series: Representing Your Client at a 1040 Audit

Author: Eva Rosenberg

CPE Credit:  3 hours for CPAs
3 hours Federal Tax Related for EAs and OTRPs
3 hours Federal Tax Law for CTEC

This course explains how to take over an audit from a client, the use of the power of attorney, communications with IRS, scheduling options for the audit, preparing the clients records--including re-constructing books when client didn't have proper accounting.

Publication Date: July 2016

Designed For
Any proactive, current or prospective, Circular 230 practitioner that understands the IRS is ramping up the "close the tax gap". Tax practitioners who want to protect their existing clients from IRS' predatory audit actions. And tax practitioners who want to grow their business into this rapidly expanding market.

Topics Covered

  • Identifying clients with unreported income
  • Identifying non-deductible expenses
  • Proof of cash spreadsheets
  • (Re)constructing books when client didn't have proper accounting
  • Locating deductions and credits client overlooked
  • What to bring to an audit
  • What not to bring
  • Changing the venue, following up, protecting yourself from your client...and more

Learning Objectives

  • Identify the Internal Revenue Manual rules regarding audits
  • Recognize what happens when a tax cheater is turned into the IRS
  • Identify what occurs when your client's tax return has been selected for an audit and the IRS requires a face-to-face meeting with your client and you are the tax professional with a POA
  • Recognize if you can get an audit moved to another location
  • Differentiate responses to make to the IDR and an audit invitation
  • Illustrate how to cancel an audit before it starts
  • Identify the method you can use before an audit to learn what the IRS knows about your client
  • Recognize what to do if representing a client in an audit where criminal issues surface involving the client
  • Recognize when to be careful to have clients avoid deductions when preparing a tax return
  • Identify deductions claimed that could be especially problematic from the IRS point of view in an audit for a client working from home, but doesn't see clients
  • Identify common types of IRS audits
  • Describe how to prevail in an audit when your client is totally in the wrong
  • Recognize options if you don't know how to do tax research
  • Identify primary reasons the IRS will select a tax return for audit
  • Describe what third-party sources the IRS might use to initiate an audit
  • Describe lottery audits
  • Recognize what an IDR is when included in an audit invitation letter
  • Identify proper responses to make to the IDR and audit invitation
  • Illustrate how to cancel an audit before it starts
  • Recognize methods to learn what the IRS knows about your client before an audit
  • Differentiate why the IRS may find a much higher amount of total deposits than your client really earned when they add up all your client's deposits to all bank accounts
  • Identify how to convince the IRS that your client didn't really earn all the extra money found
  • Evaluate why it's important to be ready with a good explanation when your client shows both rental and office in home deductions
  • Recognize the allowable deduction for business meals and entertainment
  • Identify how to avoid the hobby loss trap when a clients has losses year after year
  • Illustrate where to find deductions, credits, or adjustments that were missed on the original tax return
  • Identify deductions that will definitely be lost during the audit
  • Recognize how to reconstruct missing data
  • Differentiate IRS examiner limitations and rules
  • Identify where and how to research IRS audit practices for your client's industry

Level
Intermediate

Format
On-demand

Instructional Method
Self-Study

NASBA Field of Study
Taxes (3 hours)

Program Prerequisites
A basic understanding of a 1040 audit.

Advance Preparation
None.

Registration Options
Quantity

Fees
Regular Fee$59
Value Pass Fee$0

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