Awards & Recognition
Whether you are a first-time homeowner with questions about the tax implications of mortgage interest, an online seller who needs guidance navigating California’s changing sales tax laws, a business owner with tax questions about a potential acquisition, or simply a concerned taxpayer who needs help preparing for an IRS or California state tax audit, rely on the Tax Law Office of David W. Klasing to provide meticulous yet aggressive legal representation driven by nearly three decades of tax & business experience.
In the heart of Orange County, Irvine is a symbol of innovation, education, and thriving enterprise. Known for its master-planned communities, prestigious universities, and vibrant tech industry, Irvine’s landscape reflects ambition and success. However, beneath this surface of prosperity lies the complex challenge of navigating federal and California state tax laws.
If you live, work, or conduct business in Irvine, you may eventually encounter one of the state agencies responsible for conducting California tax audits. At least four different agencies conduct tax audits of California businesses and residents. These agencies are the Internal Revenue Service (IRS), which audits federal returns and other tax forms, and a collection of California tax authorities: Franchise Tax Board (FTB), the California Department of Tax and Fee Administration (CDTFA), and the Employment Development Department (EDD).
Any of these agencies can schedule a tax audit at any time – sometimes due to random selection, but more often, triggered by discrepancies or anomalies in the taxpayer’s records, such as failing to file returns, making luxury purchases that far exceed reported income, or padding business expenses to claim deductions improperly. Likewise, businesses are more likely to be audited if they primarily conduct their transactions in cash.
When facing tax audits from agencies like the IRS, CDTFA (BOE), EDD, or FTB, certain red flags, such as destroyed records, underreported income, or unfiled returns, can intensify the examination, leading to 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 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.
Conveniently located in downtown Irvine, CA, our Orange County tax office serves taxpayers throughout the region. To set up a reduced-rate initial consultation, call our Irvine office at (949) 681-3502 or (888) 310-3543 or contact us online.
Can California FTB, EDD, or BOE Audit Me After the IRS Is Completed?
Yet another reason it is vital to work with a tax lawyer from the outset is that the IRS and State tax agencies like the California Franchise Tax Board, Board of Equalization, and Employment Development Division are all known to share information. If an IRS or California state agency audit discovers problems or other improprieties, they will likely share this information with the sister agency. Thus, it is common for taxpayers to face a federal and subsequent state tax audit and vice-versa.
If the party under audit is a business and the IRS audit raises issues relating to understated income or payroll tax issues, it is reasonably expected for the California Employment Development Division to audit. It will typically assert employment tax obligation problems and require the business to produce, at minimum, the records required by California state law under Sections 1085 and 1092 of the CUIC. EDD will likely dig deeper into the company finances if the business has not kept these records or is unprepared to provide them and other requested documents.
California Franchise Tax Board (FTB) Audit Representation
The California Franchise Tax Board (FTB) conducts audits related to issues with California personal and business income tax return filings. The FTB conducts audits independent of the IRS when there is a suspicion that you violate California-specific tax requirements. The IRS and the FTB have different rules in certain areas, and both guidelines must be followed. An experienced tax attorney can help you prepare your records and deal with any underreporting that occurred. If you are found to owe money, the lawyer can work out a payment plan with the FTB.
We are well-versed in FTB and OTA appeal and protest procedures under the updated California tax laws. We can protect your best interests while working efficiently to resolve the controversy. We have four objectives in each case: holding your tax liabilities to a minimum, providing the information you need to make informed and strategic decisions, protecting your liberty by minimizing the risk of prosecution for California tax crimes, and helping you comply with the law. If you have any questions about protesting an FTB decision, contact our dual-licensed Orange County Tax Audit Attorneys and CPAs online, or call the Tax Law Offices of David W. Klasing at (888) 310-3543 for a reduced-rate initial consultation or schedule online today.
California Employment Development Department (EDD) Audit Representation
Payroll taxes are under the California Employment Development Department (EDD) purview. Suppose you receive notice that the EDD is auditing you. In that case, they are likely looking into whether you adequately collected and remitted state payroll taxes and have correctly classified your employees instead of improperly using independent contractors. Employers are required to withhold both state and federal payroll taxes out of their employees’ checks. If they fail to collect these or collect them and fail to remit them to the proper agency, you may be required to pay back taxes and further fines or penalties.
The biggest issue that results in audits by the EDD is the improper classification of employees as independent contractors, especially after California passed AB5. While employers are required to collect payroll taxes from employees’ checks, they are not required to do the same for independent contractors—the rules about who qualifies as an independent contractor and who does not are very complex. A tax lawyer can help you understand whether you classified adequately and, if you did not, can work with the EDD to sort out the issue without leading to civil or criminal tax penalties being imposed. If your business is facing an employment tax audit or another tax enforcement action by the IRS or EDD, our dual-licensed Irvine EDD Tax Attorneys and CPAs can work to guide your company through the audit process.
California Department of Tax and Fee Administration (CDTFA) Audit Representation
The California Department of Tax and Fee Administration (CDTFA) conducts audits related to issues with the collecting and remitting state sales taxes by businesses. What sales tax a business must charge can vary depending on the county or municipality they are located in and the type of product they sell. An audit can be random, especially if you own a business such as a bar or restaurant where sales taxes are often underreported. It can also be based on a suspicion that you are underreporting sales, are not charging proper sales tax, or are charging sales tax and not remitting the money to the state.
These types of audits can be very invasive, as the CDTFA will want to review your entire sales and purchase history. A skilled tax law attorney can help you gather the records and documents that the CDTFA will require and can ensure that any protest to challenge the conclusions of an audit is filed within the proper 30-day window. A lawyer can also work to mitigate the consequences or negotiate a repayment deal if violations have occurred.
Sales tax audits by the CDTFA can be intrusive and require large amounts of records. If the CDTFA believes you owe back taxes, working out a settlement at the audit stage may be in your best interest. Our seasoned dual-licensed Orange County Tax Attorneys and CPAs have years of experience negotiating with the CDTFA and helping to bring our clients’ cases to a successful conclusion.
California State Tax Audit Lawyers and CPAs in Irvine
At the Tax Law Offices of David W. Klasing, we are well-versed in a wide range of domestic and international tax matters. Our team excels in navigating the intricacies of tax controversies, offering strategic, practical advice to clients embroiled in disputes with the Internal Revenue Service and California state taxing authorities like CDFTA, EDD, and FTB.
Our seasoned advocates are adept at developing persuasive arguments to support our clients’ positions. Our in-depth knowledge of the federal and California state tax system and our experience in tax policies and procedures gives us a strategic edge in resolving tax disputes efficiently and effectively.
We offer comprehensive tax representation services, including sensitive (eggshell) audits, tax compliance, reporting positions, employment tax issues, estate, and gift tax disputes, cases involving unreported income, civil fraud, negligence, accuracy-related penalties, and other tax-related penalties. We specialize in complex offshore tax issues and non-compliance, guiding clients through domestic and offshore voluntary disclosures, streamlined filings, tax injunctions, tax shelters, promoter investigations, and Office of Professional Responsibility (OPR) inquiries and investigations.
Our dual-licensed Irvine Voluntary Disclosure Attorneys and CPAs offer experienced guidance through the IRS Voluntary Disclosure Practice (VDP). This program is essential for individuals who have willfully understated their Federal tax liabilities. Like the IRS, the State of California’s Franchise Tax Board (FTB) and the California Department of Tax and Fee Administration (CDTFA) provide a method for non-compliant taxpayers to regain compliant status by coming forward with the details of their failure to comply with the California state tax code. It provides a systematic and secure avenue to rectify their tax status while avoiding criminal tax prosecution. The path to voluntary disclosure to the FTB depends on whether you are an in-state or out-of-state filer. We are committed to assisting in making sincere, comprehensive, and timely disclosures to the IRS and California state tax authorities, which includes arranging for the payment of owed taxes, interest, and penalties and cooperating with the tax agencies to determine the correct tax liability.
Our Irvine office is conveniently located at:
2601 Main St. Penthouse Suite
Irvine, CA 92614
Telephone: +1 949-681-3502; 800-681-1295
