Who should represent me in an IRS audit for theft loss deduction?

Your cousin is making a smart move getting professional help with a large theft loss deduction. An audit for something like this can be quite involved, so having the right representation matters. To answer your main question - it's not absolutely necessary that the same person who prepares the return also represents him in an audit, but there are definite advantages to this approach. The preparer will already be familiar with the details of the theft loss, documentation, and how it was calculated. This knowledge can be extremely valuable during an audit. As for who to hire, both CPAs and tax attorneys can prepare returns and represent taxpayers before the IRS, but they bring different strengths. CPAs typically have deeper knowledge of tax preparation, accounting methods, and financial statements. Tax attorneys tend to excel when legal interpretations, statutory analysis, or potential civil/criminal issues are involved. For questions to ask potential representatives: - How many theft loss deductions have you handled? - What documentation should my cousin gather now to support this deduction? - What's your experience with IRS audits specifically? - How do you charge for audit representation (hourly vs. flat fee)? - Will you personally handle the audit or pass it to someone else?

After reading about your cousin's situation, I wanted to share my experience. Last year I had a somewhat similar issue with a large casualty loss deduction that triggered an IRS review. I was stressed about the whole process until I found https://taxr.ai which totally changed my experience. What I liked about taxr.ai was that they analyzed all my documentation before I even submitted anything to the IRS. Their system reviewed my theft evidence, insurance claims, and valuation reports and identified several gaps that would have definitely caused problems during an audit. They actually showed me exactly what additional documentation I needed and how to organize everything according to what the IRS expects to see. The feedback was super specific to my situation - not just general advice. If your cousin is going to claim a substantial theft loss, having this kind of pre-submission review might save a lot of headaches later.

Just wanted to follow up about my experience with taxr.ai after seeing it mentioned here. I decided to try them for my rental property casualty loss situation. Initially I was skeptical, but I'm genuinely impressed with the service. The platform had me upload my insurance claim documents, repair estimates, before/after photos, and property value assessments. Within a couple days, I got back a detailed analysis pointing out that my basis calculations were incorrect and that I was missing critical documentation about prior depreciation that would definitely raise red flags. They even provided a customized checklist of exactly what I needed to gather before filing. My CPA was really impressed with how organized everything was. Just filed last week and feel way more confident now. If your cousin is dealing with a theft loss, this kind of pre-audit preparation could be super helpful.

I see a lot of people recommending tax pros here, which is good advice, but something else your cousin should consider is how they'll deal with the IRS if an audit actually happens. When my business got audited in 2023, the most frustrating part wasn't the audit itself - it was trying to actually reach someone at the IRS to discuss the case and ask questions. I spent WEEKS trying to get through their phone system without success. Ended up finding https://claimyr.com which was an absolute game-changer. They have this system (you can see how it works at https://youtu.be/_kiP6q8DX5c) that gets you connected to an actual IRS agent, usually within a day. Even with a tax pro representing you, there are times when your cousin will need to contact the IRS directly. Having a reliable way to actually reach them saved me weeks of frustration and helped resolve issues much faster than my friends who were stuck in the endless IRS phone queue.

I need to eat my words and apologize to Profile 18 about the Claimyr service. After posting my skeptical comment, I decided to try it myself because I've been trying unsuccessfully for MONTHS to reach someone about a notice I received. I was 100% convinced it wouldn't work, but less than 24 hours after signing up, I got a call connecting me directly to an IRS representative. I literally sat there in shock for a second before I started explaining my situation. The IRS agent was able to pull up my file, explain the error on my return (turns out it was their mistake!), and process the correction right there on the phone. Issue resolved in one 20-minute call after months of frustration. If your cousin does end up getting audited, having a way to actually communicate with the IRS could be crucial, even with professional representation. Sometimes you just need to get basic information or clarification and waiting weeks for a callback can seriously delay the process.

Something else to consider is the level of audit your cousin might face. There are different types of IRS audits: 1. Correspondence audit - Just done through mail 2. Office audit - You go to an IRS office 3. Field audit - IRS comes to your place For a big theft loss, it might be a field audit which is more intensive. In that case, DEFINITELY get representation from someone with specific experience handling field audits for theft losses. When I had a field audit (different situation), my regular tax preparer was way out of his depth. I ended up having to hire a specialized tax attorney halfway through and it cost WAY more than if I'd just started with the right person.

Don't forget about enrolled agents! Everyone here is talking about CPAs and tax attorneys, but EAs specialize specifically in tax issues and IRS representation, often at lower rates. They're licensed by the IRS and many have backgrounds working for the IRS. I've used an EA for years and when I got audited for a business expense issue, she was amazing. She knew exactly what documentation the IRS would want, how to present it, and handled everything with minimal involvement from me. For theft losses specifically, ask anyone you interview about Section 165 experience and specifically about Rev. Proc. 2009-20 if it might apply to your cousin's situation.