Tax Defense ✦ IRS Audit Defense
Audited? You Never Have to Face the IRS Alone.
An IRS examination is a process with rules, deadlines, and exits at every stage. North Star Law Firm represents New Mexico individuals and businesses through every kind of exam, from a mail-in CP2000 to a full field audit, with an attorney-CPA handling both the numbers and the law.
Know Your Exam
What kind of audit did you get?
The IRS runs three kinds of examinations, and the defense posture differs for each. Correspondence exams, the large majority, happen entirely by mail and usually target one or two items: a credit, a deduction, unreported income the computers flagged. Office exams bring you (or better, your representative) to an IRS office with records on a defined list. Field exams, the serious tier, put a revenue agent into your business records with broad scope and follow-up authority.
Whatever the format, the same principle controls: with a power of attorney on file, the IRS talks to your representative, not to you. That single step ends the 2 a.m. drafting of letters to the government, prevents the innocent oversharing that expands audits, and puts someone in the room who knows what the examiner can and cannot ask for.
The Off-Ramps
Where can an audit end, and on what terms?
| Stage | What happens | Your move |
|---|---|---|
| Examination | Agent proposes adjustments in a report (30-day letter) | Contest with documentation, or agree if the numbers are right |
| IRS Appeals | Independent office weighs hazards of litigation | A written protest; most contested audits settle here |
| 90-day letter | Statutory Notice of Deficiency issues | Petition the U.S. Tax Court within 90 days, before paying |
| Tax Court | Prepayment litigation; most cases settle pre-trial | Try the issues that deserve trying |
What wins audits?
Documentation, organized and delivered strategically. Examiners propose adjustments where records are missing, thin, or contradictory; they concede issues where the file is tight. Half of audit defense is reconstruction, building the substantiation the return deserved from bank records, third-party data, and reasonable methods the case law accepts. The other half is scope control: answering what was asked, producing what the law requires, and declining the invitations to expand the exam. An attorney-CPA does both natively, and the conversation is privileged in ways a preparer’s is not.
What if the audit has criminal undertones?
A small fraction of exams are eggshell audits, civil on the surface with potential fraud exposure underneath: unreported cash, amended years, a preparer under investigation. Those cases demand counsel from the first phone call, because statements to a revenue agent are evidence and privilege matters. If anything about your situation makes you hesitate before answering an examiner honestly, stop and get representation first.
The Attorney-CPA Difference
The examiner has done a thousand audits. Your representative should have too.
- Power of attorney on file, so the IRS deals with us, not you
- Records reconstruction by a CPA when substantiation is thin
- Scope control that keeps a one-issue exam a one-issue exam
- Appeals and Tax Court strategy built in from the first response
Proof, In Print
He wrote the book on tax defense. Literally.
Phillip Zagotti co-authored Taxed: A Taxpayer’s Guide to Tax Defense and Resolution with Ashley Burdette, a plain-English guide to audits, IRS collections, and the resolution tools described on this page. If you want to understand your situation before you call anyone, or you’d rather work the problem yourself first, start with the book. When you decide you want a professional in your corner, the consultation is free.
Questions & Answers
IRS audit questions from New Mexico taxpayers
Why was I selected for audit?
Most audits start with computer scoring or document mismatches: a 1099 the return missed, deductions out of range for the income, or a partner or preparer already under exam. Selection is not an accusation, but the response still sets the tone for everything after.
Should I just talk to the auditor myself and explain?
It routinely goes badly. Taxpayers over-share, guess at answers, and volunteer documents that open new issues. With representation the examiner gets accurate, complete, scoped responses, and you never have to be in the room.
How far back can the IRS audit?
Generally three years from filing, six where income is substantially understated, and without limit for fraud or unfiled returns. Most exams stay inside three years, but the answer for your case comes off your transcripts.
What if I can’t find receipts?
Reconstruction is normal audit work. Bank statements, vendor records, mileage logs rebuilt from calendars, and reasonable estimating methods recognized by the courts fill many gaps. Missing paper narrows the fight; it doesn’t automatically lose it.
What does audit representation cost?
A flat fee quoted in writing after the free consultation, scaled to the exam type and years involved. Correspondence exams are far less than field exams; either way you know the number before you commit.
The audit has a deadline on it. Don’t spend it deciding alone.
Free consultation with an attorney-CPA: what the notice means, what the examiner can ask for, and what your file needs to show.