Oxnard Tax Attorney

No matter what kind of audit you are dealing with, it is important to contact a tax attorney who can help guide you through the process and mitigate any potential damages to your net worth or to your very liberty. Below we discuss four of the major agencies that conduct audits in California.

IRS Audit Representation

The IRS conducts audits related to your federal tax returns. This can involve your personal tax return or tax returns filed by your business (often both simultaneously). IRS audits are rarely completely random, with most audits the results of your return being flagged for potential issues, such as underreporting of income, claiming unsubstantiated expenses, claiming excessive exemptions or credits you do not qualify for, or the IRS perceiving that you have failed to pay taxes that you owe (nonfliers). The IRS can usually go back 3 tax years when reviewing your records and returns, but this can be extended to six years in some cases. If fraud is detected the statute of limitations becomes open back to the dawn of time.

Types of IRS, FTB, CDTFA and EDD Audits

The IRS, FTB, CDTFA and EDD conduct three distinct types of audits: correspondence audits, office audits, and field audits. Likely one of the first questions your dual licensed Tax Lawyer & CPA will ask you when you discover you are being audited is about which type of audit you are facing. The reason for this is that you can tell a lot about what the federal of California government is after and how thorough they will be simply by identifying which type of audit they have decided to pursue.

Correspondence, office, and field audits differ by how they are conducted and how in-depth the audit is. There are also two informal names for audits based on their content. An eggshell audit occurs when the taxpayer is aware of a substantial noncompliance on their tax return that could be viewed as intentional income tax evasion the auditor is not aware of. Reverse eggshell audits occur when the auditor suspects tax fraud and begins to collect information for a clandestine criminal tax investigation without informing the taxpayer. Eggshell and reverse eggshell audits are especially risky and prone to becoming a criminal tax investigation followed by prosecution.

Correspondence Audits

Correspondence audits, also known informally as “mail audits,” are initiated when the IRS, FTB, CDTFA and EDD, sends you a letter asking for documents and records to back up the information on your tax return. This type of audit will ordinarily be conducted through correspondence rather than in person. While this ordinarily is the least risky type of audit, if you have cheated on the return at issue, you could be at risk for criminal tax prosecution especially if you are facing an eggshell audit. Our dual-licensed Ventura County, CA IRS Tax Audit Attorneys and CPA can help you reconstruct the necessary records and mitigate any civil damages or criminal exposure for errors you made on the returns under audit. If no further issues are discovered, the IRS, FTB, CDTFA (formerly known as the BOE) and EDD will usually come to a resolution on a correspondence audit within three to six months.

Office Audits

The second type of audit you could be facing is an office audit. In an office audit, you will be required to bring the requested documents and records to an IRS, FTB, CDTFA and EDD office where agents will review them in person and interview you. You should always have one of our dual licensed Tax Lawyer CPAs prepare you for and accompany you to such a meeting. Since 70% of communication is nonverbal and a person being audited is normally nervous, it is often better to have your Tax Attorney & CPA attend the audit on your behalf. Office audits typically resolve themselves within three to six months, but if the taxpayer makes mistakes or does not cooperate fully, the government may decide to further instigate a field audit.

Field Audits

Field audits are typically the most serious civil audits, eggshell audits, reverse eggshell audit or criminal tax investigations that the IRS, FTB, CDTFA (BOE) and EDD can undertake. If you are the target of a field audit, the federal or California agents will often attempt to come to your home, place of business, or both, and conduct their investigation on site. A field audit is commonly used when conducting a net worth analysis. If the IRS suspects that your income is understated on your tax returns, they will attempt to visit your home to analyze your standard of living. If you live in a way that requires more income than reported, the auditor may use that net worth analysis as potential evidence of criminal tax fraud.

A field audit for a business can be extremely invasive and disruptive to business operations. The auditor can request interviews with employees and tours of offices or other business facilities. Revenue agents frequently compare reported income from sales to your actual sales data, they could speak to your suppliers to confirm the number of materials you have purchased, they could examine any inventory stored on site and examine your inventory valuation methods especially where you are a manufacturer and utilize many other methods to confirm the company’s reported activities. The sheer amount of information available to an auditor during a field audit is alarming and difficult to control. If the audit is also an eggshell or reverse eggshell audit, there is a significant chance that the audit could become a criminal tax investigation.

This is the most serious type of audit, and you may need to contact a tax lawyer right away to avoid potentially devastating civil and criminal consequences. Attorneys are far better suited to represent you in any audit as they are trained in the art of persuasion and can leverage their ability to bring an appeal or litigation should the IRS get either the facts or the law wrong in conducting and concluding your audit. No tax professional is better suited to get you the optimal results.

Criminal Tax Defense Lawyer in Oxnard

When facing high-risk tax audits from agencies like the IRS, CDTFA, or FTB, certain red flags, such as destroyed records, underreported income, badges of fraud or unfiled returns, can intensify the examination, and may lead to such high-risk eggshell and reverse eggshell tax audits. As such, residents and businesses must be aware of potential criminal tax violations and the signs indicating that they might be under a more rigorous investigation by the IRS’s Criminal Investigation Division (CID). This is especially so when the taxpayer has a history of blatantly cheating on their federal tax returns and is now under audit and thus fears criminal tax prosecution. Even international tax evasion schemes that utilize remote tax havens are easily detected by the IRS, which works with tax and law enforcement agencies around the globe and throughout the United States.

We will help your understanding of the stages of an audit, criminal tax investigation, tax crime indictment, and prosecution, as well as the red flags that may pique the interest of the IRS or the California Franchise Tax Board (FTB), California Department of Tax and Fee Administration (CDTFA) and the Employment Development Department (EDD) and trigger the entire sequence. If you or your small business has been selected for a tax audit in Oxnard, and you are concerned about a criminal tax investigation resulting from or occurring alongside the audit, engaging our Oxnard, CA Criminal Tax Audit / Investigation Attorneys + CPA services at the onset of a high-risk audit / criminal tax investigation will maximize the possibility of a favorable outcome without escalating to criminal tax charges. We have never had a federal or California audit client criminally prosecuted for tax crimes. We are here to provide aggressive, informed representation in areas including: