IRS and Illinois Tax Representation: Notices, Audits and Payment Plans

IRS and state tax representation means we deal with the tax agency for you: we read the notice, gather the proof, write the response and follow the case until it closes. Our firm represents individuals and businesses before the IRS and the Illinois Department of Revenue (IDOR). Notices from the Canada Revenue Agency or Indian tax authorities are handled by your Canadian CPA or Indian CA, and we coordinate so the explanation matches what was filed in the United States.

What is covered by IRS and state tax representation?

• Notices. Balance-due notices, math-error notices and underreporter letters such as the CP2000.
• Audits and examinations. Correspondence audits, office audits and field audits of income tax or employment tax returns.
• Collection. Payment plans, hardship requests and the first response to a collection notice.
• Penalty relief. Requests for abatement of late-filing, late-payment, late-deposit and some foreign-reporting penalties.
• Illinois. Notices from IDOR on income tax, sales tax and withholding.
• Amended returns and prior-year filings. Fixing returns that triggered the notice.

Who can speak for you? The IRS says the person you authorize on Form 2848 must be eligible to practice before the IRS. CPAs, attorneys and enrolled agents fall in that group. A signed form lets us receive your confidential information and negotiate on your behalf, but it does not replace your own signature on a return.

How a representation engagement works

1. Triage. Send us the notice the day it arrives. We read the notice type, tax year and response date.
2. Consultation. We ask what the notice says, what you filed and whether anything has changed since.
3. Written engagement agreement. You sign it before we contact the agency. It names the notice, the scope and the fee basis.
4. Power of attorney. You sign Form 2848 (or the Illinois authorization) so we can speak for you. The scope is limited to the years and tax types at issue.
5. Document checklist. We list the proof needed: statements, receipts, brokerage forms, foreign tax documents.
6. Response. We prepare the reply, attach supporting documents and send it before the deadline.
7. Follow-up. We track the case, answer further letters and confirm that a closing letter arrives.

Typical notices and our first step

Our first-steps guide walks through the same sequence, and the CP2000 response guide and audit types guide cover the common letters in detail.

Penalty relief and payment options

Penalty relief depends on facts. The IRS's First Time Abate relief applies to taxpayers with three years of timely compliance and can cover failure-to-file, failure-to-pay and failure-to-deposit penalties; a request can be made by calling the number on the notice or sending a written statement or Form 843. The IRS is moving to an Automatic Exemption from Penalty for eligible forms, which needs no request when you qualify, and its pages describe a transition period. We check which route fits your return year and form, and if neither applies we look at reasonable cause. Our penalty abatement playbook explains the options.

When the balance itself is the problem, installment agreements and other arrangements may be available. See IRS payment plans and offers.

Foreign-reporting penalties deserve extra care. For example, the IRS lists a $10,000 failure-to-file penalty on Form 8938, with more for continued failure after notice. These cases often involve the non-willful route discussed in foreign account and asset reporting.

Documents to prepare

• The full notice, the envelope if the date matters, and any earlier letters.
• A copy of the return for the year named and the supporting workpapers.
• Third-party forms: W-2, 1099, 1098, K-1 and foreign statements.
• Bank statements, receipts and proof of payment for the amounts in question.
• Records you must keep. The IRS says to keep records for 3 years in most cases, 6 years if you omit more than 25% of income, 7 years for worthless securities or bad debt claims, and employment tax records for at least 4 years.

Common mistakes to avoid

• Calling the agency before you have read and understood the notice.
• Paying a demand that does not match your records without checking it first.
• Sending original documents instead of copies.
• Trusting unsolicited callers or texts; see our scam alert guide.
• Letting a response date pass because the Canadian or Indian side seems more urgent.

A worked example

A Naperville couple receives a CP2000 saying they underreported $30,000 of stock sale proceeds. They sold company shares that vested earlier in the year; the broker's form shows $0 basis, but their employer already put $24,000 of vesting value on the W-2. The correct basis is $24,000, so the real gain is $6,000, not $30,000. We prepare a response with the W-2, the vesting statement and a corrected Form 8949, ask for the proposed increase to be removed or reduced, and calendar the follow-up. The notice becomes a small adjustment rather than a large bill.

How we can help

We handle IRS and Illinois notices from our Aurora, Illinois office for clients throughout Kane, DuPage, Will and Kendall counties. We handle the U.S. side and coordinate with your Canadian CPA or Indian CA when a notice touches foreign income or accounts. Related services include business tax returns and planning and bookkeeping and accounting, and our Aurora page lists local resources. Learn how authorized representatives work by country. Our full list of services is on the services page.

Frequently asked questions

General information only. It is not tax, legal, accounting or immigration advice for your situation, and rules change; confirm the current rules with the official source or a licensed professional in the relevant country.