If you are like most tax professionals, you spend the vast majority of your client time preparing tax returns and with tax and financial planning and accounting. Over the course of your career you have seen very few audits, and for that you thank the audit rate percentages and the care you take in making sure your clients’ returns are completed correctly. While it is a rare occasion that one of your clients gets audited, you know generally what needs to happen if they do. But what do you do if one of your clients shows up at your door with an audit letter that provides only 15 days to respond? And what if the due date is near or already passed by the time you receive the letter?

If you think these things don’t happen, you are not alone. At my company we handle audits all year long, year in and year out (over 23,000 last year), and we were quite surprised when last fall we began to see a steady stream of what we are now calling “speeded up” audits. When a few months ago the IRS commissioner told his employees they would be doing “less with less” due to budget cut restraints, it all began to make sense. But reducing the response timeframe to as few as 15 days? Really?

For the moment, that’s what we have to deal with. In a nutshell, the IRS is sending out letters requesting an appointment, and as is tradition, asking for contact within 10 days. But many times a second letter is being sent, often on the same day as the first, which includes an examination report and a limited time of 15 days to respond. Additional tax years are often also opened for audit at this time. If there is no contact during this 15 day period, the option for local appeals is lost and the case is sent to the Notice of Deficiency (NOD) unit immediately.
These speeded-up audits can create a time of high emotion for both you and your clients. Here’s a list of how to help them – and you – get through it.
1. First of all, don’t panic. But do put your client immediately to work to obtain all the documents listed in the IRS letter. Call the examiner right away and find out where the case stands. Without a power of attorney (POA), he or she may not speak to you, but it’s worth a try. Meanwhile, get a signed POA from your client, and remember that for a joint return each spouse will need a separate POA.

2. If the due date has already passed, ask the examiner if the case is still open. If it is, request to work the case.

3. If the case has already been closed and sent to the NOD unit, your client’s options are limited, but not hopeless. They can pay the bill or file a petition with the tax court if they have a good argument for disagreeing with the IRS’s position -- and the documentation required to support their claims.

4. It’s very important to understand what you can and cannot do legally once the case is in the jurisdiction of the tax court. You should also set the expectations with your client, as it can take several months to hear back from the court once the examiner releases the case to the NOD unit, and several more months to resolve the case after that.

5. If you are not an attorney or admitted to practice before the U.S. Tax Court, it is against the rules, and Circular 230, for you to advise a client in filing the tax court petition. Seek the help of a colleague with the right credentials to ensure the petition is completed correctly. Once the petition is filed, as an enrolled agent or CPA you will be able to work the case up to the pre-trial appeals level, where the majority of cases are settled.

With the IRS promising to do “less with less” and the outlook for increased IRS funding uncertain, there is a good chance the speeded-up audit is here to stay. If you have clients who are planning an extended vacation, business trip or hospital stay, suggest they leave you with a signed power of attorney (Form 2848) before they go. Advise your clients to have their mail checked regularly while they are away and request that any IRS letters be sent to you in their absence. With any luck you will never need to use it, but it’s great to be prepared.

Dave Du Val, is vice president of customer advocacy at TaxAudit.com, the largest and fastest-growing IRS audit defense service for individuals and small businesses.