The Tax Times: How To Successfully Defend An IRS Audit

IRS Audits are one of the most stressful actions the IRS can take against a taxpayer. In 2024, the IRS conducted 505,514 tax return audits and assessed over $29 billion in recommended additional taxes as a result of these examinations. This figure includes audits across all taxpayer categories, with the majority involving individual income tax returns and a concentration of field audits among high-income and corporate taxpayers.

While fewer than 1% of individual returns are audited, the risk rises sharply for high earners, businesses, and those with complex filings. Facing the IRS alone can lead to costly mistakes, professional IRS audit representation provides the protection and strategy necessary to achieve the best outcome.

To defend an IRS audit, begin by carefully reviewing the audit notice to understand exactly which years and parts of your tax return are being examined, and then systematically gather all relevant documentation, receipts, and records to support the items questioned by the IRS.

Steps for Defending an IRS Audit

· Review the audit notice: Identify which tax years are under review and which specific items (income sources, deductions, or credits) are targeted.

· Gather documentation: Collect tax returns, receipts, proof of payment, bank statements, contracts, and any other supporting records. Good documentation—often maintained before the audit—is your best defense.

· Identify weaknesses: Analyze your records for any discrepancies or areas that may be questioned, such as missing receipts or inconsistent information.

· Organize evidence: Present your documentation clearly to support your reported income and deductions. Proper organization makes it easier to substantiate your position.

· Choose representation: For complicated audits, consider hiring a qualified tax professional such as a tax attorney, CPA, or enrolled agent. These professionals can challenge IRS findings, present evidence, negotiate outcomes, and manage all communications (via Form 2848 Power of Attorney).

· Respond to findings: You may agree or dispute the IRS’ conclusions. If you disagree, provide a clear, thorough explanation and supporting documents. If needed, appeal through the IRS Office of Appeals or Tax Court.

· Maintain professionalism: Always be factual, courteous, and prompt in responses to IRS requests. Transparent and professional communication helps resolve the audit faster.

Essential Audit Defense Documentation

· Receipts and proof of payment showing the company/entity, date, amount, and nature of activity.

· Mileage logs for any business, charitable, or medical mileage deductions.

· Financial statements and business records if business activity is being audited.

· Residency records for claiming specific exclusions or credits.

Professional Representation Benefits

· Legal protection through attorney-client privilege

· Efficient and organized responses to IRS queries and documentation requests

· Negotiation skills to potentially reduce penalties or liability

· Peace of mind—shielding from direct IRS questioning.

What to Expect

· You’ll be asked for records and may need to attend meetings by mail, phone, or in-person (correspondence, office, or field audits).