Attorneys Audit Technique Guide Now Available Online

Monica McKillip, CPA, Senior Tax Associate

The IRS has published the Attorneys Audit Technique Guide to help examiners audit an attorney’s tax return. 

The Guide, which was effective as of March 2011, notes in part that:

(1) The identity of a client and the nature of his or her fee arrangement generally is not protected by the attorney-client privilege

(2) Attorneys who base their fees on hours worked plus case-related costs should be able to provide detailed records of their time and costs because that is how they bill their clients

(3) Attorneys working on a contingency fee basis use either a gross fee contract (where court costs, expert fees, etc., are deductible business expenses) or a net fee contract (where expense advances are treated as loans until settlement).

The guide can be found on the IRS website: http://www.irs.gov/businesses/small/article/0,,id=241098,00.html