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In Honolulu and across Hawaii, where entrepreneurship and tourism drive complex financial activity, residents can sometimes tread close to the edges of federal tax compliance or outright go off the reservation. In April 2023, the Internal Revenue Service (IRS) released its Strategic Operating Plan under the Inflation Reduction Act, initially backed by roughly $80 billion to become a “digital-first” tax agency. The plan emphasizes a technology-forward approach, integrating data analytics, machine learning, and artificial intelligence to identify federal tax noncompliance. While this modernization may increase efficiency, it also heightens the need for meticulous federal filings. It elevates the risk that intentional or accidental errors escalate into high-risk audits or even eggshell/reverse-eggshell scenarios if not handled correctly.

Facing an IRS Tax Audit in Hawaii?

At the Tax Law Offices of David W. Klasing, we analyze each client’s facts and craft a defense strategy tailored to their specific exposure. Recognizing that individual taxpayers and businesses face distinct hurdles, we provide comprehensive solutions for every IRS audit concern. As the IRS amplifies enforcement, mounting a formidable defense becomes indispensable. Our team, fortified by extensive IRS audit training, knowledge, and experience, works to neutralize IRS maneuvers, present the facts most favorable to your position, curtail assessments of additional federal tax, and minimize or avoid related civil & criminal tax penalties wherever possible.

Our dual-licensed Hawai‘i Tax Audit Attorneys & CPAs handle sophisticated federal tax audit controversies day in and day out. Where appropriate, we accurately manage corrective filings, that is, the preparation of amended returns that reflect our optimal settlement posture, and represent you through Office, Field, and Correspondence audits, always prioritizing your interests to reduce risk and deliver custom solutions. The issues can be vast: international and U.S.-territorial income, payroll tax compliance, entity structuring and business transitions with federal & state tax implications, and more. With nearly three decades of combined tax and legal experience, our award-winning team is a trusted resource for taxpayers in Honolulu and throughout the Islands.

Need a Criminal Tax Defense Attorney in Hawaii?

Hawaii, a hub of tourism, entrepreneurship, and cross-border financial activity, is still intertwined with the complexities of federal tax law. Many residents and growing businesses navigate labyrinthine federal rules as the Islands’ economy thrives, sometimes underestimating the inherent risks. Facing a federal tax audit is not just a procedural hurdle; it is a critical juncture that, if mishandled, can escalate into a full-blown criminal tax investigation and, in severe cases, criminal tax prosecution. This risk is heightened when a taxpayer with a history of willfully inaccurate filings is now under audit. Even an apparent oversight can allow a routine federal audit to morph into a potentially catastrophic criminal tax investigation. IRS has signaled increased audit attention on wealthy taxpayers, large corporations, and complex partnerships through 2025. In May 2025, it launched 125,000 cases targeting high-income non-filers, which raises the audit temperature for high-risk profiles in Hawai‘i.

The IRS uses multiple civil and criminal tax enforcement pipelines to identify perpetually delinquent or fraudulent taxpayers, collect what it deems owed, and deter others through highly publicized criminal tax prosecutions. Civil auditors and collection officers typically notify the subjects of their audits or collection actions. Since 2023, and reaffirmed in 2025, the IRS has largely ended unannounced visits by revenue officers, who now use an appointment letter known as Letter 725-B to schedule a meeting, while criminal investigation agents may still make unannounced approaches to preserve surprise. Remember, making materially false statements to federal agents can be charged separately under 18 U.S.C. § 1001.

If you are the subject of an IRS audit that might also be a clandestine criminal tax investigation, promptly engaging our dual-licensed Criminal Tax Defense Attorneys and CPAs at the Tax Law David W. Klasing in Hawai‘i would be wise. Our command of federal tax procedure, combined with deep insight into the IRS’s investigative methods, can be the linchpin that prevents an audit from spiraling into a criminal tax case. The risk profile remains serious. IRS Criminal Investigation reported for FY 2024 that it opened more than 2,600 criminal investigations, secured over 1,500 convictions, and again reached a 90 percent conviction rate. From understanding the intricacies of IRS audits to spotting the tells that draw the Criminal Investigation Division’s attention, being well-versed is not just recommended; it is necessary. For help, contact the Tax Law Offices of David W. Klasing at 800-681-1295, or schedule a reduced-rate initial consultation online.

Handling Federal Tax Litigation and Controversies in Hawaii

At the Tax Law Offices of David W. Klasing, our dual licensed Hawaii Tax Litigation Attorneys & CPAs handle complex federal IRS tax disputes. We have maintained a record of never losing in federal tax court and we only take cases we believe we will win. Filing a Tax Court petition can significantly improve your position, especially when anticipated penalty and interest reductions exceed litigation costs. Our approach is two staged, first, we work the case in IRS Appeals, then, if needed, we take a second bite at the apple by negotiating with IRS Chief Counsel, which is rarely necessary. To date, we have not had to step foot in Tax Court, sparing clients the most costly aspect of litigation. With the IRS’s settlement rate hovering around 98 percent, in court tax litigation is ordinarily avoided, which benefits both our clients and the government.

Resolving a dispute with the IRS does not always require a courtroom. Many taxpayers and the Service reach common ground through administrative resolution. However, when federal audit results are unfair, you face two choices, accept the IRS determination or defend your rights through federal tax litigation. Despite its vast resources, the IRS can misinterpret facts or law, which can lead to erroneous assessments of additional tax, penalties, and interest. If you do not challenge an incorrect determination, you bear the financial consequences of those errors. When the stakes are high and the government’s position is questionable, the real decision is not simply whether to accept or fight, it is whether to ensure fairness and accuracy in a system where even the IRS can err.

At the Tax Law Offices of David W. Klasing, we vigorously contest negligence, accuracy, and other civil tax penalties. We also manage complex offshore compliance problems, including domestic and offshore voluntary disclosures and streamlined filings. Whether you face criminal tax exposure, a civil tax audit, an eggshell audit, a reverse eggshell audit, or a criminal tax investigation, the experience of our dual licensed Tax Litigation Attorneys & CPAs in Hawai‘i is invaluable. Our dedication to personalized and effective representation distinguishes our practice. We specialize in disputes arising in:

Return to Tax Compliance Without Facing Criminal Tax Prosecution

The IRS is leveraging new technology and personnel to act more aggressively against suspected willful noncompliance. Much of this stems from the Inflation Reduction Act funding and the IRS Strategic Operating Plan, which prioritize complex, high-risk cases and analytics driven enforcement. In this environment, voluntary disclosure is more important than ever for taxpayers who need a safe path back to compliance.

With that in mind, now is a prudent time to understand the IRS Voluntary Disclosure Practice. When properly executed, a voluntary disclosure can help eligible taxpayers avoid criminal tax prosecution while resolving back taxes, interest, and civil penalties. The program is administered by IRS Criminal Investigation and is initiated on Form 14457, which the IRS revised in July 2025. CI reviews Part II and, if preliminarily accepted, issues a letter and forwards the case for civil processing.

You must hire an experienced dual-licensed criminal tax defense attorney & CPA to guide this process. Only communications with an attorney are protected by the attorney client privilege and attorney work product doctrine. Your original preparer can be compelled to testify and may become a witness against you, especially if they prepared returns that must now be corrected. A dual licensed Attorney CPA can also engage a consulting accountant under a Kovel arrangement, preserving privilege while leveraging accounting support.

Our dual licensed Hawaii Voluntary Disclosure Attorneys and CPAs navigate the IRS Voluntary Disclosure Practice for clients with willful exposure, providing a structured way to correct filings and reduce criminal risk, while arranging to pay tax, interest, and applicable penalties. The IRS emphasizes that a voluntary disclosure must be truthful, timely, and complete, and that the practice creates no substantive rights, acceptance is discretionary, and eligibility can be revoked if a taxpayer fails to fully cooperate. The program is not available for illegal source income.

We also manage the full menu of related pathways, including domestic and offshore matters, streamlined filings where noncompliance was non willful, and submissions for delinquent FBARs and international information returns. If you act before the IRS begins a civil examination or a criminal tax investigation, a properly executed voluntary disclosure can ordinarily bring you back into compliance and significantly reduce the risk of criminal tax prosecution.

As long as a taxpayer who has willfully evaded federal tax, potentially including intentionally unfiled foreign information returns combined with evasion of U.S. income tax on offshore income, self-reports through a domestic or offshore voluntary disclosure before the IRS initiates an audit or criminal tax investigation or prosecution, that taxpayer can ordinarily be brought back into tax compliance and receive a nearly guaranteed pass on criminal tax prosecution criminal tax prosecution, often with reduced civil penalties compared to the alternatives. We deal extensively with:

Need IRS Appeals Representation in Hawaii?

When an audit concludes, the IRS sends a letter that explains its findings and any proposed changes. If you agree, you can sign the agreement form and pay what is due. If you disagree, you have the right to appeal through the IRS Independent Office of Appeals. Our dual licensed Hawaii IRS Appeals Attorneys and CPAs will advocate vigorously before Appeals to reduce your liability and avoid unnecessary litigation.

Appeals is an independent forum created by the Taxpayer First Act, and it resolves disputes without litigation where possible. In practical terms, you generally receive a 30-day letter offering an appeal opportunity, or a Statutory Notice of Deficiency that provides 90 days to petition the U.S. Tax Court, 150 days if you are outside the United States. Publication 5 explains how to request an appeal, and the IRS now instructs taxpayers to mail their written protest to the address on the letter, not directly to Appeals. In 2025, the IRS also refreshed guidance on letters that carry appeal rights and expanded alternative dispute resolution options, including Fast Track programs that can resolve some cases far more quickly than a traditional appeal.

At the Tax Law Offices of David W. Klasing, we have maintained a record of never losing in federal tax court and we only take cases we believe we will win. Filing a Tax Court petition can materially improve your position, especially where expected penalty and interest reductions exceed litigation costs. Our approach is two staged, first, we work the case in IRS Appeals, then, if needed, we take a second bite at the apple by negotiating with IRS Chief Counsel, which is rarely necessary. To date, we have not had to step foot in Tax Court, sparing clients the most costly aspect of litigation. With the IRS settlement rate commonly reported near 98 percent, in court tax litigation is ordinarily avoided, which benefits both our clients and the government.

From trust fund recovery penalties to disallowed business expenses and beyond, we will keep you informed at every step, maximize your chances on appeal, and prepare the strongest possible Tax Court petition if needed, while seeking a favorable compromise. Led by David W. Klasing, a former public accounting audit manager with nearly three decades in public accounting and tax law, we bring strategic insight to every appeal. Whether you need to contest the entire determination or specific issues, we will educate you on your options and guide you toward a fair resolution. We can help you appeal IRS audit results or other IRS decisions involving:

Talk With Our Hawaii International Tax Attorneys

At the Tax Law Offices of David W. Klasing in Hawai‘i, our dual-licensed International Tax Attorneys and CPAs provide vigilant representation, navigating the IRS’s aggressive enforcement of unreported but taxable global income and omitted offshore business and financial account reporting that would have flagged foreign source income.

Our team offers strategic guidance for American expatriates and multinational businesses, ensuring compliance while minimizing worldwide tax burdens. Now is the time to have seasoned counsel review your international filing history, so you can return to compliance in a way that minimizes additional tax, penalties, and interest, while reducing the risk of criminal tax prosecution. We also work with top international lawyer Marc Schwartz, a dually licensed International Tax Attorney and CPA, which strengthens our capacity to address the federal and offshore implications of international tax, estate planning, and compliance.

We serve a diverse clientele, including individual taxpayers, corporate shareholders, partnership members, and entities such as corporations, LLCs, and trusts, guiding them through the process of regaining compliance regarding foreign assets and income.

Specializing in the nuances of international tax law, we advise on FBAR and FATCA compliance, tax treaties, entity structuring, and cross border operational planning. For taxpayers facing willful exposure, the IRS Criminal Investigation Voluntary Disclosure Practice provides a pathway back to compliance and is initiated on Form 14457, which the IRS revised in July 2025, and is administered under IRM 9.5.11.9. For non-willful issues, we prepare streamlined submissions and delinquent international information returns. We also assist with FBAR e filing through FinCEN’s BSA system and with FATCA Form 8938 reporting, which the IRS updated for individuals in 2025. These updates reflect the Service’s continuing emphasis on high-risk international noncompliance.

Our seasoned dual licensed Hawaii International Tax Attorneys and CPAs also structure international business operations for tax efficiency as the IRS intensifies civil and criminal tax investigations into offshore evasion. We advise on entity selection with liability, capitalization, and exit planning in mind, ensure precise compliance for foreign owned U.S. corporations and foreign corporations with U.S. activities, and explain the implications of establishing a U.S. presence. Our goal is to help you navigate international responsibilities confidently, minimize double taxation, and avoid transfer pricing penalties. Click on the following to learn more:

Navigating Cryptocurrency Tax Issues in Hawaii

In a recent landmark for digital-asset enforcement, the Department of Justice and IRS Criminal Investigation secured a two-year prison sentence against early bitcoin investor Frank Richard Ahlgren III after he pleaded guilty to filing a return that falsely reported his cryptocurrency gains, a matter DOJ described as the first criminal tax evasion prosecution centered solely on cryptocurrency. This underscores that in the crypto arena, where many assume transactions are opaque, a purely criminal tax noncompliance case can still draw incarceration, so swift and deliberate damage control is critical whenever an IRS criminal tax investigation or a high-risk eggshell or reverse-eggshell audit may be on the horizon.

To pierce perceived anonymity, the government has repeatedly used John Doe summonses that compel exchanges to produce user records. Courts authorized summonses to Coinbase in 2016, to Circle and its affiliate Poloniex in 2021, to Kraken in 2021, and to sFOX in 2022. In 2023, a federal judge ordered Kraken to turn over specified customer data. These actions show how quickly a crypto audit can become an eggshell audit or even a covert criminal tax investigation if mishandled.

New reporting rules raise the stakes beginning with 2025 transactions. Treasury and the IRS finalized broker reporting regulations for digital assets in June 2024. Brokers must report certain sales beginning with the 2025 calendar year on the new Form 1099 DA, with statements generally furnished in early 2026. The IRS has issued the form and instructions and provided transition relief for 2025. This expanded information reporting will increase IRS visibility into digital asset activity.

If you have unreported cryptocurrency accounts or wallets, come forward before the IRS initiates contact. Voluntary disclosure or other corrective pathways can reduce civil penalties and help you avoid criminal tax prosecution, especially for offshore exposure. Work with our dual licensed Hawaii cryptocurrency tax attorneys and CPAs for John Doe summons related audit representation, criminal tax defense, corrective filings, and end to end reporting support for Bitcoin, Ethereum, and other digital assets. Call 800 681 1295 or schedule a reduced-rate initial consultation here. For more information, see the following:

Concerned About Civil or Criminal Exposure for Unfiled Federal Tax Returns in Hawaii?

The United States taxes citizens and resident aliens on worldwide income, regardless of where they live, and layers additional disclosure rules on foreign assets through FATCA and the Bank Secrecy Act’s FBAR. If you hold specified foreign financial assets above the filing thresholds, you must file Form 8938 with your return, and if your foreign accounts exceeded an aggregate of 10,000 dollars at any point during the year, you must file an FBAR with FinCEN. The IRS recently reminded filers about correctly determining maximum account values for FBARs. In May 2025, the IRS launched a 125,000 case initiative targeting high income non-filers, underscoring renewed attention on unfiled returns.

If you are late on FBARs and have not been contacted by the IRS, the agency advises filing delinquent FBARs as soon as possible to minimize potential penalties. FinCEN confirms who must file and the 10,000-dollar threshold, and notes that civil and criminal penalties can apply for willful violations.

At the Tax Law Offices of David W. Klasing, our Hawaii dual licensed Unfiled Tax Attorneys and CPAs guide clients through late filings, back returns, and foreign account disclosures, with strategies to mitigate civil or criminal tax exposure. We can help you get compliant under the Internal Revenue Code, FATCA, and FBAR rules, protect privileged communications, and coordinate corrected filings that reduce risk. For any federal tax planning, compliance, or controversy needs in Hawaii, contact the Tax Law Offices of David W. Klasing at 800 681 1295 or reach us online to schedule a reduced rate initial consultation:

ALL MAIL MUST BE SENT TO THE ORANGE COUNTY OFFICE. 2601 Main St. Penthouse Suite, Irvine, CA 92614

*SEE ABOVE POLICY ON SCHEDULING A MEETING AT ONE OF OUR APPOINTMENT-ONLY SATELLITE LOCATIONS:

Note: This office is by appointment only!

David’s proven proficiency is now available in Honolulu, Hawaii at our appointment-only satellite office, providing both legal and federal tax services in one place—at a single hourly billing rate. We have introduced a flexible scheduling option where our clients can reserve a four-hour slot at any of our satellite locations. David W. Klasing will travel to any of our satellite offices to meet with you personally. This option must be preceded by a one-hour phone or go-to-meeting consultation to warrant incurring the travel expenses and opportunity costs of traveling. We have designed this service to benefit our clients, with no additional travel expenses added to your bill. Call us at (702) 997-6465 or complete our online contact form today.

Our Honolulu, Hawaii Office is Conveniently Located at:

1003 Bishop Street, Suite 2700
Honolulu, HI 9681
Telephone: (808)-518-2380

Facing an IRS Tax Audit in Hawaii?

Need a Criminal Tax Defense Attorney in Hawaii?

Handling Federal Tax Litigation and Controversies in Hawaii

Return to Tax Compliance Without Facing Criminal Tax Prosecution

Need IRS Appeals Representation in Hawaii?

Talk With Our Hawaii International Tax Attorneys

Navigating Cryptocurrency Tax Issues in Hawaii

Concerned About Civil or Criminal Exposure for Unfiled Federal Tax Returns in Hawaii?

Our Honolulu, Hawaii Office is Conveniently Located at:

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