Audit Representation

What Is an EA?

Enrolled Agents (EA) are the tax professionals.

Unlike attorneys or CPAs, Enrolled Agents specialize in taxation.

EAs are federally licensed by the US Department of the Treasury. An EA can advise, represent and prepare returns for individuals, partnerships, corporations, estates, trusts and any entities with tax-reporting requirements.

EAs are also experts in tax planning. Proper planning can legally reduce the amount of taxes due and proper tax preparation can help prevent an audit.

An EA can represent taxpayers before all administrative levels of the IRS for audits, collections and appeals. Only EAs, CPAs and attorneys can represent taxpayers before the IRS.

Traditionally, the approach to paying for the professional representation before the taxing agency (IRS or State agency, in California = Franchise Tax Board) is the billable hours method. For those clients represented by DRK this is $175 per hour. The usual fee for a simple audit is $875. The more complex the higher the fee.

As an alternative, DRK offers a prepaid coverage option when you have a tax return prepared.

The Audit and Tax Agency Correspondence Coverage (ATACC)

This elective service will entitle you to be represented by DRK Associates should you be audited by the Internal Revenue Service (IRS) or the Franchise Tax Board (FTB). When you elect to have this service at the time of your tax preparation, you will be charged a fee of 15% of the cost of the preparation of your income tax return. This fee will be added to your invoice. For example, if the cost of the preparation of your 2008 income tax return is $285, the prepaid ATACC would be $43 ($285 x 15%). The coverage will always attach to the covered tax return and will not expire.

Your election to purchase this service may only be made at the time of preparation of your income tax return. It will not be available after that time.

What is covered?

  • Your Federal and California tax returns are covered for examinations and inquiries by the Internal Revenue Service or the Franchise Tax Board for the tax return that you were charged.
  • The first 6 hours we spend to organize your records (recordkeeping).
  • The initial appointment in the presence of an auditor, (subsequent meetings, if necessary, would be charged at our hourly rates) during an audit of your covered tax returns at the Sacramento Office of either taxing authority.
  • Responding or answering letters and other correspondence from the IRS or FTB regarding a simple matter on your covered return.

The following are not covered:

  • Tax Agency Inquiries regarding material facts left off Organizer and/or documents that were not provided to us.
  • The cost of travel and lodging for audits outside the Sacramento area, the fees for amending tax returns, the time necessary for additional organization or bookkeeping.
  • Any additional tax, penalties or interest you may incur as a result of the audit.
  • Representation on a matter that is in Collection status .

This service is not available to any client who has been audited in any of the past three years, unless approved by management. DRK Associates reserves the right to decline audit coverage for any reason.