You opened the envelope. You read the words "we are examining your tax return." And now you're thinking: how hard can this be? I filed the return, I have my records, I can explain my deductions to the IRS agent. I'll save money by handling this myself.
Stop right there. That thinking - that specific calculation about saving representation fees - is exactly what leads taxpayers to pay thousands more in additional assessments than they would have with professional irs audit representation. I've watched it happen hundreds of times over 15 years of representing clients before the IRS. The taxpayer thinks they're saving $3,000 in representation fees. They end up paying $15,000 in additional tax plus penalties because they didn't understand burden of proof requirements, volunteered damaging information, or failed to properly substantiate legitimate deductions.
Here's what irs audit representation actually means: a credentialed professional - CPA, attorney, or enrolled agent - stands between you and the IRS during the examination process. They hold Power of Attorney to communicate directly with the revenue agent on your behalf. You don't attend meetings. You don't respond to questions. You don't explain your tax positions to someone trained to find additional tax liability. Your representative does all of this, using knowledge of tax law, examination procedures, and negotiation strategies that most taxpayers simply don't possess.
The value isn't abstract. When I represent a client in an audit, the revenue agent never speaks directly with them unless we strategically decide it's beneficial. Every Information Document Request gets filtered through me. Every proposed adjustment gets challenged through proper procedures. Every settlement discussion happens with full understanding of appeals rights and litigation potential. The client continues running their business while I handle the examination.
Compare that to the DIY approach. You're taking time away from your business or job to gather documents, attend meetings, and respond to IRS inquiries. You're making statements to a trained examiner without understanding which information helps your case and which information creates new problems. You're accepting proposed adjustments because you don't know which ones can be successfully disputed. And you're doing all of this while stressed about potential financial consequences.
This isn't about whether you're smart enough to handle an audit. You might be brilliant in your field. But tax audit representation requires specific knowledge:
Revenue agents spend months in training learning how to conduct examinations. They examine returns daily. You're facing this situation once, maybe twice in your lifetime. The experience gap is massive, and it shows in outcomes.
At Dimov Audit, we've represented clients through every examination type the IRS conducts - correspondence audits, office examinations, field audits, and appeals. We're PCAOB registered and hold CPA licenses across multiple states, which means we can represent clients nationwide regardless of where they live or where the examination occurs. When your audit notice arrives, you're not just getting someone to respond on your behalf. You're getting strategic representation from professionals who understand exactly how IRS examinations work and how to position your case for the best possible outcome.
Let me explain what happens from the moment that audit notice arrives. The IRS didn't randomly select your return. A computer algorithm flagged it based on specific discrepancies, statistical outliers, or third-party information mismatches. By the time you receive the notice, the revenue agent assigned to your case has already reviewed your return and identified the issues they intend to examine.
The agent received formal training at the IRS National Training Center. They learned examination techniques, interview methods, financial analysis, and legal research. They studied how to identify undocumented deductions, trace income through bank deposits, analyze business expense ratios, and recognize common tax avoidance schemes. Their performance gets measured partly by the additional tax they assess through examinations. They're professional, they're trained, and their job is to find adjustments to your return.
Your initial audit notice includes an Information Document Request - a detailed list of records the IRS wants to review. This might seem straightforward. They're asking for receipts, they're asking for mileage logs, they're asking for bank statements. You have these documents, so you'll provide them. But here's what you're missing: the IDR is strategic. The agent chose these specific requests based on what they expect to find or fail to find in your documentation.
When you respond to an IDR without representation, you typically provide everything requested plus additional documents you think might be helpful. This is where problems compound. Those additional documents often contain information the agent wasn't looking for but will absolutely use if they find issues:
The examination typically progresses through an interview. For field audits, this happens at your business location or your representative's office. For office examinations, you meet at the IRS office. The agent asks questions about your business operations, your record-keeping systems, your income sources, and your expense documentation. These questions sound conversational. They're not. The agent is gathering information to evaluate your credibility, identify inconsistencies with your tax return, and determine whether to expand the examination scope.
Professional examination technique involves asking open-ended questions and letting taxpayers talk. "Tell me about your business travel last year." "How do you determine which vehicle expenses are business versus personal?" "Walk me through your process for tracking cash sales." Taxpayers without representation answer these questions fully, trying to be helpful and transparent. They don't realize they're often providing ammunition for proposed adjustments.
A representative changes this dynamic completely. When I represent a client, the agent directs questions to me, not the taxpayer. I control what information gets provided and how it's presented. If the agent asks an ambiguous question, I clarify what they're actually trying to determine before providing any response. If they request documents beyond the scope of the original IDR, I evaluate whether providing them is strategically beneficial or potentially harmful. If they propose expanding the examination to additional tax years or issues, I challenge whether that expansion is appropriate under examination procedures.
The burden of proof matters more than most taxpayers realize. You must prove that your reported income is complete and accurate. You must prove that your deductions are legitimate, ordinary, necessary, and properly documented. The IRS doesn't need to prove you're wrong - you need to prove you're right. Without understanding these burden of proof requirements, taxpayers often fail to provide adequate substantiation even when they have legitimate deductions.
Consider vehicle expenses. The IRS requires contemporaneous mileage logs showing date, destination, business purpose, and miles driven for each trip. "Contemporaneous" means you recorded these details when the trips occurred, not later when you received an audit notice. Most taxpayers without representation try to reconstruct mileage logs from memory or from calendar entries. These reconstructed logs rarely withstand scrutiny. The agent will disallow the deductions, and without representation, most taxpayers accept this outcome rather than challenging it through proper procedures.
Revenue agents work under time pressure. They're assigned multiple examinations simultaneously, and they need to close cases efficiently. This creates opportunities for representatives who understand the system:
Taxpayers handling their own audits lack this strategic perspective. The examination doesn't end with the agent's initial determination. You have rights - to disagree with proposed adjustments, to request appeals consideration, to submit additional documentation, to propose alternative resolutions. But exercising these rights requires knowing they exist and understanding the procedures for invoking them. The agent isn't going to volunteer that you have these options or explain how to use them effectively.
I've reviewed hundreds of cases where taxpayers initially tried handling audits themselves before engaging our firm. Three patterns emerge repeatedly - mistakes that transform manageable situations into significant financial problems.
The IRS sends an IDR asking for documentation of $12,000 in business travel expenses. The taxpayer thinks being cooperative and transparent will create goodwill with the agent. So they provide the requested travel documentation plus bank statements, credit card records, and a detailed explanation of their entire business operation. Those additional materials reveal that they used a business credit card for some personal expenses. The agent now questions whether other business deductions include personal use. The examination scope expands from verifying $12,000 in travel to reviewing $85,000 in total business expenses. An audit that should have resulted in minor adjustments becomes a comprehensive examination with substantial proposed changes.
I represented a marketing consultant last year who made exactly this mistake before hiring us. The IRS initially questioned $8,000 in home office deductions. She provided the requested documentation plus three years of bank statements "to show her income was reported correctly." The bank statements revealed $25,000 in deposits that didn't appear on her Schedule C. These were personal loans from family members, but the IRS treated them as unreported business income until we documented their actual nature through loan agreements and donor statements. What started as an $8,000 deduction question became a $25,000 unreported income issue - solely because she volunteered information beyond what was requested.
Taxpayers assume that if they claimed a deduction, they must have had a reason, and explaining that reason will satisfy the IRS. It doesn't work that way. You need documentation that meets specific standards:
Without this documentation, your explanation - however truthful and reasonable - doesn't satisfy the burden of proof. I see taxpayers explain to agents that they definitely drove 15,000 business miles last year for client meetings and site visits. The agent asks for the mileage log. The taxpayer admits they didn't maintain one but offers to reconstruct it from their calendar. The agent disallows the deduction entirely. No log means no deduction, regardless of whether the business use actually occurred.
What makes this particularly problematic? Sometimes documentation exists but the taxpayer doesn't present it correctly. They have receipts but they're disorganized and incomplete. They have business purpose explanations but they're vague or inconsistent. They have supporting records but they don't connect them clearly to the questioned deductions. A representative knows how to gather, organize, and present documentation in ways that meet IRS substantiation standards. We create document packages that make the agent's verification job straightforward while demonstrating compliance with documentation requirements.
When the revenue agent issues an examination report proposing additional tax, you have 30 days to respond. You can agree with the proposed changes, disagree and request Appeals consideration, or propose alternative adjustments with supporting documentation. Most taxpayers without representation either agree immediately - even when the proposed adjustments are questionable - or they let the deadline pass without responding at all.
Letting deadlines pass is catastrophic. If you don't respond within 30 days:
Even when taxpayers respond within deadlines, they often accept proposed adjustments that could be successfully challenged. A representative understands which adjustments are based on solid legal ground and which ones are negotiable. We know when technical tax law supports a different position. We know when documentation can be strengthened through supplemental submissions. We know when the agent has misapplied regulations or overlooked relevant case law.
Consider the compounding effect of these mistakes. You volunteer extra information that expands the examination scope. You fail to provide adequate documentation for legitimate deductions. You miss the deadline for formally protesting proposed adjustments. Now you're facing a much larger assessment than the original examination would have produced, you've lost some of your procedural rights, and you're in a much weaker position for any negotiated resolution. The cost of representation - typically $3,000 to $8,000 for most audits - becomes trivial compared to the unnecessary additional tax you're paying because you tried to handle it yourself.
Professional audit representation starts with Form 2848, Power of Attorney and Declaration of Representative. This form authorizes your representative to act on your behalf in matters before the IRS. Once filed, all IRS correspondence comes to your representative, not to you. The examining agent communicates with your representative, not with you. You're removed from direct contact with the IRS unless we strategically decide your participation would be beneficial.
This separation creates immediate value:
Document management forms the foundation of effective audit representation. When you engage us, we collect all relevant records - receipts, invoices, bank statements, contracts, mileage logs, whatever documentation relates to the examined issues. We don't just dump these records on the examining agent. We organize them logically, create summary schedules linking documentation to tax return line items, and present everything in formats that make verification straightforward.
This presentation strategy matters more than most people realize. Revenue agents receive mountains of disorganized documents from taxpayers representing themselves. Sorting through chaotic records increases examination time, creates frustration, and makes agents more skeptical about the taxpayer's overall credibility. When we present well-organized documentation packages with clear summaries and logical arrangement, examinations progress more efficiently and agents view our submissions more favorably.
Strategic communication management represents another critical component. Every interaction with the examining agent gets filtered through professional judgment about what information advances your case and what information creates unnecessary risk. Here's what this looks like in practice:
Negotiation of disputed items separates adequate representation from expert representation. Revenue agents propose adjustments based on their interpretation of the facts and law. Sometimes their positions are clearly correct - you claimed deductions without adequate documentation and no amount of negotiation will change that outcome. But often their positions are negotiable. The documentation might be stronger than they initially recognized. The technical tax law might support a different treatment. The facts might warrant a different characterization than what appeared on the return.
I've negotiated hundreds of disputed items through audit representation. Sometimes we prove the original return position was completely correct and no adjustment is warranted. Sometimes we demonstrate that while the taxpayer's approach had issues, the agent's proposed adjustment goes too far - maybe 60% of the questioned expenses are legitimate rather than zero. Sometimes we identify alternative legal approaches that both parties can accept. The key is understanding which disputes have merit and how to frame arguments in ways that persuade examining agents to modify their positions.
Appeals representation extends beyond the initial examination. If the revenue agent proposes adjustments you don't accept, you have the right to appeal within the IRS before any assessment occurs. The appeals process provides an independent review by an IRS appeals officer who wasn't involved in the examination. Appeals officers have more settlement authority than examining agents and can consider hazards of litigation - meaning they evaluate what might happen if the case went to Tax Court and factor that uncertainty into settlement discussions.
Throughout this entire process, your representative is also managing procedural requirements - responding within IRS deadlines, filing necessary forms, preserving your rights to judicial review if needed, and ensuring that examination procedures comply with IRS Internal Revenue Manual requirements. These procedural protections exist, but only if someone knows they exist and properly invokes them.
What you're really getting with professional audit representation is someone who has handled these situations hundreds of times standing between you and the IRS. We know the examination procedures, we understand the technical tax requirements, we can identify when agents make procedural or substantive errors, and we can navigate the system to achieve outcomes that taxpayers representing themselves rarely obtain.
I need to be honest about something: not every audit requires professional representation. Some situations are straightforward enough that taxpayers can handle them successfully. Understanding the difference between these simple cases and complex examinations that require professional help is critical to making smart decisions about representation.
But recognize how narrow these situations are. The moment any complexity enters - multiple issues being examined, business income or expenses involved, documentation that's incomplete or ambiguous, technical tax law questions, or substantial amounts at stake - the calculation shifts dramatically in favor of professional representation.
I represented a restaurant owner whose field audit initially focused on verifying reported revenue. The agent requested point-of-sale system data and reservation logs. During the examination meeting at the restaurant, the agent noticed that employees were eating meals during shifts. He asked how the owner accounted for employee meals. The owner explained they didn't track it formally because it seemed minor. The agent then assessed additional income for unreported compensation - the value of meals provided to employees. What started as revenue verification became a compensation issue that added $18,000 to the assessment. Professional representation would have managed that interaction differently, either documenting the meals as a de minimis fringe benefit or properly characterizing them from the outset.
Consider your time value honestly. Responding to an IRS examination yourself will consume:
If your time has significant economic value - you're billing clients, running a business, earning high income - the opportunity cost of DIY audit response often exceeds the cost of hiring representation even before considering the outcome differences.
The risk tolerance question matters. Some people handle stress well and can navigate uncertain situations without anxiety affecting their business or personal life. Others find IRS examinations extremely stressful, and that stress spills over into other areas. If you're in the latter category, representation provides peace of mind that has real value even beyond the financial outcomes. You're not lying awake at night worrying about what the agent might find or whether you're responding correctly to document requests.
Our approach to irs audit representation reflects 15 years of experience handling examinations across every IRS examination type and business industry. We're not generalists who occasionally handle audits alongside other services. Tax compliance and audit representation form the core of what we do, which means we've developed systematic approaches that consistently deliver favorable outcomes for clients.
The foundation starts with our credentials:
When a client engages us for audit representation, the first step involves comprehensive review of the audit notice, the tax return being examined, and all documentation the client has available for the questioned issues. This initial assessment determines our representation strategy:
Document organization receives intensive attention. We don't forward whatever the client gives us directly to the examining agent. We create structured document presentations with summary schedules, organized exhibits, and clear narratives explaining how the documentation supports the return positions. For business expense audits, this might mean creating spreadsheets that trace each expense category from bank statements through receipts to tax return line items. For income verification, we might create reconciliation schedules showing how gross receipts tie to bank deposits and third-party reporting forms.
This level of organization serves multiple purposes. First, it makes the agent's verification job straightforward, which reduces examination time and creates more favorable dynamics. Second, it demonstrates that you maintain professional record-keeping systems, which increases overall credibility. Third, it allows us to control the information flow - the agent sees what we've prepared, structured the way we want to present it.
Consider a recent case involving a software development company. The IRS examined three years of returns, initially questioning $85,000 in research and development costs that the company had deducted currently rather than capitalizing.
Our representation strategy involved several elements:
The final outcome: instead of $85,000 being capitalized (creating approximately $65,000 in additional tax across three years), only $17,000 was capitalized, resulting in about $13,000 in additional tax. The client saved roughly $52,000 compared to the agent's initial position. Our representation fee was $7,500. The client netted $44,500 in savings - and avoided three years of amended returns with substantial additional assessments.
Appeals representation forms another component of our service when examination-level negotiations don't achieve acceptable results. We've represented numerous clients through IRS Appeals, including cases involving disputed deductions, income characterization issues, penalty assessments, and examination procedure challenges. The appeals process requires different skills than examination-level representation - appeals officers respond to well-argued legal positions and realistic case evaluations.
What clients consistently tell us they value most is the combination of technical expertise and practical communication. We explain examination procedures and options in clear language without excessive jargon. We provide realistic assessments of case strengths and weaknesses. We keep clients informed throughout the process without overwhelming them with details they don't need to manage. And we deliver outcomes that reflect strategic representation rather than passive response to IRS proposals.
Your response to an IRS audit notice in the first 48 hours matters more than most taxpayers realize. The actions you take - or fail to take - immediately after receiving the notice can significantly affect the examination outcome.
Don't make the mistake of responding to the IRS yourself first "to see what happens" and then hiring representation if things go poorly. Once you've provided information to the examining agent, you can't take it back. Once you've answered questions in interviews, those statements become part of the examination record. Once you've volunteered documents beyond what was requested, the agent will use any issues they find in those materials. Early representation prevents these problems rather than trying to fix them after they've occurred.
Professional audit representation typically costs $3,000-$8,000 for most examinations, potentially more for complex multi-year cases. Frame this cost correctly:
If representation results in $15,000 less in proposed adjustments compared to what you'd achieve alone, the representation paid for itself twice over. If representation prevents examination scope expansion that would have added $30,000 to the assessment, the value becomes overwhelming.
When you contact a representative, provide complete information:
This complete picture enables the representative to provide realistic assessment of the situation and develop effective strategy from the outset.
If you're already past the initial response deadline or if the examination has progressed beyond the initial notice, don't assume it's too late for representation. We've taken over cases at various stages:
Earlier representation is better, but later representation beats no representation when significant issues are at stake.
The appeals process deserves special mention because many taxpayers don't understand it's available. If you disagree with the examining agent's proposed adjustments, you have the right to appeal within the IRS before any assessment is made. This appeal goes to an independent Appeals officer who wasn't involved in the examination. Appeals provides a genuine opportunity to contest examination results, but using it effectively requires understanding appeals procedures and presenting argued positions persuasively.
What you're really deciding when that audit notice arrives is this: do you want to face a trained IRS examining agent alone, or do you want experienced representation that understands the examination process, knows the technical tax law, and can navigate the system to protect your interests?
At Dimov Audit, we've represented clients through every type of IRS examination across all industries and business structures. We know what examining agents look for, how examinations typically progress, which issues are negotiable and which aren't, and how to position cases for optimal outcomes whether through examination-level resolution or appeals. When you receive that audit notice, you don't need to face it alone. Professional tax audit representation provides expertise, strategic advantage, and peace of mind that delivers measurable value regardless of the examination outcome.
If you've received an IRS audit notice or if you're concerned about potential examination of your returns, contact Dimov Audit for a consultation. We'll assess your situation, explain your options, and provide clear guidance on the best approach for protecting your interests. Our nationwide practice enables us to represent clients regardless of location, and our experience across all examination types means we've likely handled situations similar to yours. The response deadline matters - don't wait until time runs out to get the representation you need.
Our dedicated team is ready to assist you on your path to financial success.
