Table of Contents
Chapter 1 - Overview of IRS Tax Audits1
| Introduction | 1 |
| Overview of IRS Tax Audits | 1 |
| Opening of an Audit | 2 |
| Not All Audits Are Alike | 3 |
| Correspondence Audits | 3 |
| Office Audits | 4 |
| Field Audits | 5 |
| The Statute of Limitations | 6 |
| The Stages of a Tax Audit | 7 |
| Tax Audit Best Practices | 9 |
| Summary | 12 |
| Review Questions | 14 |
Chapter 2 - IRS Tax Audit Analysis and Mitigation15
| Introduction | 15 |
| Why the Return Was Selected | 15 |
| Audit Probabilities | 16 |
| Types of Auditees | 17 |
| Audit Trigger Reductions | 18 |
| Minimize the Appearance of Excess | 19 |
| Report all Income | 19 |
| Request an Extension | 20 |
| Special Cases: Cash Businesses | 20 |
| Special Cases: The Gig Economy | 21 |
| Special Cases: Unearned Income | 22 |
| Special Cases: Virtual Currency | 22 |
| High-Quality Records Are Essential for a Successful Audit | 23 |
| Summary | 24 |
| Review Questions | 25 |
Chapter 3 - Client Representation26
| Introduction | 26 |
| Client Rights in an IRS Audit | 26 |
| Parties Permitted to Practice Before the IRS | 27 |
| Tax Preparers with Limited Practice Rights | 27 |
| Enrolled Actuaries | 28 |
| Enrolled Retirement Plan Agents | 28 |
| Tax Return Preparers | 29 |
| Representatives with Unlimited Practice Rights | 29 |
| Other Representation | 30 |
| Representation Based on Taxpayer Relationship | 30 |
| Who May Not Practice Before the IRS | 30 |
| Loss of Eligibility | 30 |
| Failing to Meet Renewal Requirements | 31 |
| The Power of Attorney | 31 |
| Acts Performed Under a Power of Attorney | 31 |
| Substituting or Delegating Authority | 32 |
| Agent Authorizing IRS to Disclose Returns to Others | 32 |
| When a Power of Attorney Is Required | 32 |
| Non-IRS Power of Attorney | 33 |
| Perfecting a Power of Attorney | 33 |
| Reasons for IRS Rejection of a Power of Attorney | 33 |
| Signatures and/or Signature Dates Missing | 34 |
| Lack of Specificity as to Authorized Acts | 34 |
| Retention or Revocation of Prior Powers of Attorney | 34 |
| Revocation of Power of Attorney or Withdrawal of Representative | 35 |
| Summary | 35 |
| Review Questions | 36 |
Answers to Chapter Questions37
Glossary40
Index41
Course Details
Author: Steven M. Bragg, CPA
Steven Bragg, CPA, has been the chief financial officer or controller of four companies, as well as a consulting manager at Ernst & Young. He received a master’s degree in finance from Bentley College, an MBA from Babson College, and a Bachelor’s degree in Economics from the University of Maine. He has been a two-time president of the Colorado Mountain Club, and is an avid alpine skier, mountain biker, and certified master diver. Mr. Bragg resides in Centennial, Colorado. He has written more than 300 books and courses, including New Controller Guidebook, GAAP Guidebook, and Payroll Management.
Publication/Revision Date: 10/15/2026
Course Exam Questions (online): 10 (multiple-choice)
Program Delivery Method: Self-Study (NASBA QAS Self-Study)
Available Formats of Course Text: PDF or PDF plus printed copy sent in the mail
Course Level, Prerequisites, and Advance Preparation Requirements
| License | Course Level | Prerequisites | Advance Preparation Requirements |
|---|
| CPA | Overview | None | None |
| EA/OTRP | Overview | None | None |
Sponsor ID Numbers
National Registry of CPE Sponsors ID: 107615
IRS Qualified Sponsor ID: FWKKO — Course ID: FWKKO-T-00805-26-S
State CPA Board Sponsor ID Numbers (where applicable)
Florida Division of Certified Public Accounting: 0004761
Hawaii Board of Public Accountancy: 14003
New York State Board for Public Accountancy: 002146
Ohio Accountancy Board: CPE .51 PSR
Pennsylvania State Board of Accountancy: PX178025
Texas State Board of Public Accountancy: 009349
Learning Objectives
As a result of studying the course material, you should be able to meet the objectives listed below:
- Identify the reasons why the IRS may initiate an audit.
- Specify the nature of the three types of IRS audit.
- Describe the contents of an audit log, and why it should be maintained.
- Identify the steps to take before accepting an IRS adjustment.
- Specify the benefits of maintaining adequate transaction documentation and reconciliations.
- Identify the documentation requirements for digital asset holdings.
- Recall the authorized practice areas for different types of tax and accounting professionals.
- Specify the nature of an IRS representation engagement.
