Awards & Recognition
Most residents of Los Angeles are required to file a state tax return, also known as Form 540 (California Resident Income Tax Return). You must generally file a California tax return if you are a state resident, a non-resident with California source income, or a part-year resident with certain types of California income. If you failed to file a state income tax return, made errors on the return that you filed, or failed to provide all of the necessary information, you are at high risk of being audited by the California Franchise Tax Board (FTB), which assesses state income tax and enforces compliance with California’s tax regulations.
If you have been chosen for an FTB tax audit, you are at risk of incurring costly tax assessments, interest, and penalties. It is critical to ensure that you are thoroughly prepared. At the Tax Law Office of David W. Klasing, we are Los Angeles state tax return audit lawyers with more than 20 years of combined experience representing individuals and businesses in FTB audits and appeals. Our tax firm’s founder, dually certified attorney-CPA David W. Klasing, spent over 10 years practicing as a public auditor, giving our team invaluable insights into FTB procedures, regulations, and auditing strategies. We put our knowledge to work protecting your best interests at every stage of the process. For a reduced-rate consultation regarding a California tax audit, contact the Tax Law Office of David W. Klasing online, or call our Los Angeles tax office at (310) 492-5583 today.
California Franchise Tax Board (FTB) Audit Representation
What is an FTB Audit?
The California Franchise Tax Board (FTB) conducts audits related to California’s personal and business income tax filings. These audits can follow on the heels of an IRS audit and also can:
- Be conducted entirely independent of any IRS enforcement action;
- Often involve California-specific differences from federal tax law that may have been ignored or misapplied.
How Can You Fight an FTB Audit?
Often, the best way to fight a guaranteed bill from the FTB following an IRS audit is by prevailing in the IRS audit initially. At the Tax Law Offices of David W. Klasing, we will help you:
- Reopen a federal audit through a process called audit reconsideration;
- Appeal or litigate both federal and California state tax audits.
What if the FTB Conducts Its Own Audit?
Sometimes, the FTB conducts its own audits related to issues specific to California law. We will help you understand the differences between federal and California tax laws and the various methods of supporting your California tax position. Our dual-licensed Tax Attorneys and CPAs will also help you appeal or litigate any California assessments of additional tax penalties and interest you believe are unfair.
What if You Owe Back Taxes to the FTB?
Due to differences between federal and California state laws, you may owe back taxes to the FTB even if an IRS audit finds you did not owe anything to the federal government. If you do indeed owe back taxes, we will help you:
- Negotiate with the FTB to work out a reasonable payment plan or other collection alternatives;
- Help you minimize or avoid penalties and interest.
Why Should You Never Ignore an FTB Notice?
It is never prudent to ignore an FTB notice, even if you disagree with its findings or are unsure precisely what the notice references. Ignoring notices can lead to:
- Accruing interest on any unpaid tax debts until your debt is satisfied;
- Escalating issues, making them more complicated and costly to resolve later.
Why Was I Chosen for a Tax Return Audit by the Franchise Tax Board (FTB)?
The Franchise Tax Board reported auditing “approximately 232,000 tax returns, which accounted for $1.63 billion in net assessments and denied refund claims,” during the period from 2016 to 2017. Audits are conducted by five separate divisions of the FTB, but for many taxpayers, the most pertinent is the FTB’s Individual & Pass Through Entity Audit Bureau, which is responsible for auditing both individual taxpayers and flow-through entities, such as LLCs, trusts and estates, and S corporations.
There are various reasons a taxpayer or business may be chosen by the Franchise Tax Board for a tax audit. While some taxpayers are chosen at random by computer software, most FTB audits are initiated because the FTB has detected an issue. Common triggers for FTB state income tax audits include, but are not limited to, the following:
- Attempting to claim credits that are no longer valid, or for which the taxpayer does not qualify
- Failing to file Forms 540, especially if there are multiple failures to file
- Failing to pay California income taxes
- Underreporting California source income
How Long Can the FTB Audit Your California Tax Return?
It is critically important for Los Angeles residents and other California taxpayers to understand that the Franchise Tax Board is not bound to the same statutes of limitations that restrict the Internal Revenue Service when conducting audits. The IRS is generally limited to an auditing period of three years, with some exceptions where the statute of limitations extends to six years. There are only a few scenarios in which the IRS has unlimited time to conduct an audit, such as a case where the taxpayer has failed to file a tax return or has filed a fraudulent return.
By comparison, the FTB has four years – not three – in which to conduct a California tax audit. The four-year period begins counting down from the date on which the taxpayer filed his or her state return. Like the IRS, the FTB also has no time limit to audit a taxpayer in situations where the taxpayer has failed to file a California income tax return, or where the taxpayer has filed a false state return.
Can You Appeal the Results of an FTB Tax Audit?
If you disagree with the results of an audit of your California tax return, it may be possible to dispute the FTB’s findings, which is a process known as “appealing.” Taxpayers may appeal FTB decisions to the California Office of Tax Appeals (OTA), a relatively new agency which was established by the Taxpayer Transparency and Fairness Act of 2017. Los Angeles residents should be advised that the OTA – no longer the California Board of Equalization (BOE) – now oversees all appellate procedures related to state tax return audits.
There are strict time limits for appealing an FTB decision following an audit of your California tax return. Your appeal must be filed no later than your personalized “appeal by” date, which will be printed on the notice you received from the FTB concerning its decision. You will need to include specific materials in order to have a chance of appealing successfully, namely (1) your contact information, (2) a copy of the FTB notice you received, (3) a written explanation outlining the FTB’s findings and why you believe they are improper, and (4) factual and financial documentation to support your argument.
CDTFA and EDD Tax Audit Attorneys in Los Angeles
EDD audits can be triggered by an employer’s noncompliance with California employment tax and payroll tax regulations. A typical example is the illegal misclassification of employees as independent contractors. Whether your California or federal employment tax matter involves fringe benefits, unemployment taxes, worker classification audits, EDD audits, payroll accounting methods, the additional medicare tax, trust fund recovery penalties, accuracy-related penalties, seasonal workers, tax evasion charges, or related issues, our dual-licensed EDD Tax Audit Attorneys & CPAs possess the knowledge and experience to help you find a resolution.
CDTFA tax audits frequently involve sales and use tax issues, particularly concerning internet sales tax compliance – a recent consequence of the Supreme Court’s 2018 ruling in South Dakota v. Wayfair, Inc. You should immediately consult our dual-licensed Online Business Tax Audit Attorneys & CPAs if your business has been chosen for a California sales tax audit. Recently, the CDTFA issued updated guidance on protocols and procedures for disputing, or “appealing,” CDTFA determinations. Though the CDTFA tries to provide clear instructions for taxpayers, it is not recommended to attempt handling an appeal without professional tax representation. It is in your best interests to consult our experienced dual-licensed CDTFA Audit Attorneys & CPAs before filing an appeal or petition for redetermination due to the legal and financial complexity involved.
California State Tax Return Audit Lawyers and CPAs Serving Los Angeles
At the Tax Law Office of David W. Klasing, our California tax return audit attorneys and CPAs have years of combined experience providing state audit and appeals representation to Los Angeles residents. Our nationally recognized, award-winning tax team is dedicated to protecting the rights of California taxpayers while helping our clients reenter compliance with state tax laws and filing requirements.
Whether you have just been notified of your selection for an FTB audit of your California returns, or your audit recently concluded, and you now wish to dispute its outcome, our Los Angeles FTB lawyers are here to provide the audit defense you need. For a reduced-rate consultation, call our Los Angeles tax office at (310) 492-5583, or contact the Tax Law Office of David W. Klasing online.
Most residents of Los Angeles are required to file a state tax return, also known as Form 540 (California Resident Income Tax Return). You must generally file a California tax return if you are a state resident, a non-resident with California source income, or a part-year resident with certain types of California income. If you failed to file a state income tax return, made errors on the return that you filed, or failed to provide all of the necessary information, you are at high risk of being audited by the California Franchise Tax Board (FTB), which assesses state income tax and enforces compliance with California’s tax regulations.
If you have been chosen for an FTB tax audit, you are at risk of incurring costly tax assessments, interest, and penalties. It is critical to ensure that you are thoroughly prepared. At the Tax Law Office of David W. Klasing, we are Los Angeles state tax return audit lawyers with more than 20 years of experience representing individuals and businesses in FTB audits and appeals. Our tax firm’s founder, dually certified attorney-CPA David W. Klasing, spent over 10 years practicing as a public auditor, giving our team invaluable insights into FTB procedures, regulations, and auditing strategies. We put our knowledge to work protecting your best interests at every stage of the process. For a reduced-rate consultation regarding a California tax audit, contact the Tax Law Office of David W. Klasing online, or call our Los Angeles tax office at (310) 492-5583 today.
Why Was I Chosen for a Tax Return Audit by the Franchise Tax Board (FTB)?
The Franchise Tax Board reported auditing “approximately 232,000 tax returns, which accounted for $1.63 billion in net assessments and denied refund claims,” during the period from 2016 to 2017. Audits are conducted by five separate divisions of the FTB, but for many taxpayers, the most pertinent is the FTB’s Individual & Pass Through Entity Audit Bureau, which is responsible for auditing both individual taxpayers and flow-through entities, such as LLCs, trusts and estates, and S corporations.
There are various reasons a taxpayer or business may be chosen by the Franchise Tax Board for a tax audit. While some taxpayers are chosen at random by computer software, most FTB audits are initiated because the FTB has detected an issue. Common triggers for FTB state income tax audits include, but are not limited to, the following:
- Attempting to claim credits that are no longer valid, or for which the taxpayer does not qualify
- Failing to file Forms 540, especially if there are multiple failures to file
- Failing to pay California income taxes
- Underreporting California source income
How Long Can the FTB Audit Your California Tax Return?
It is critically important for Los Angeles residents and other California taxpayers to understand that the Franchise Tax Board is not bound to the same statutes of limitations that restrict the Internal Revenue Service when conducting audits. The IRS is generally limited to an auditing period of three years, with some exceptions where the statute of limitations extends to six years. There are only a few scenarios in which the IRS has unlimited time to conduct an audit, such as a case where the taxpayer has failed to file a tax return or has filed a fraudulent return.
By comparison, the FTB has four years – not three – in which to conduct a California tax audit. The four-year period begins counting down from the date on which the taxpayer filed his or her state return. Like the IRS, the FTB also has no time limit to audit a taxpayer in situations where the taxpayer has failed to file a California income tax return, or where the taxpayer has filed a false state return.
Can You Appeal the Results of an FTB Tax Audit?
If you disagree with the results of an audit of your California tax return, it may be possible to dispute the FTB’s findings, which is a process known as “appealing.” Taxpayers may appeal FTB decisions to the California Office of Tax Appeals (OTA), a relatively new agency which was established by the Taxpayer Transparency and Fairness Act of 2017. Los Angeles residents should be advised that the OTA – no longer the California Board of Equalization (BOE) – now oversees all appellate procedures related to state tax return audits.
There are strict time limits for appealing an FTB decision following an audit of your California tax return. Your appeal must be filed no later than your personalized “appeal by” date, which will be printed on the notice you received from the FTB concerning its decision. You will need to include specific materials in order to have a chance of appealing successfully, namely (1) your contact information, (2) a copy of the FTB notice you received, (3) a written explanation outlining the FTB’s findings and why you believe they are improper, and (4) factual and financial documentation to support your argument.
California State Tax Return Audit Lawyers and CPAs Serving Los Angeles
At the Tax Law Office of David W. Klasing, our California tax return audit attorneys and CPAs have been providing state audit and appeals representation to Los Angeles residents for more than 20 years. Our nationally recognized, award-winning tax team is dedicated to protecting the rights of California taxpayers while helping our clients reenter compliance with state tax laws and filing requirements.
Whether you have just been notified of your selection for an FTB audit of your California returns, or your audit recently concluded, and you now wish to dispute its outcome, our Los Angeles FTB lawyers are here to provide the audit defense you need. For a reduced-rate consultation, call our Los Angeles tax office at (310) 492-5583, or contact the Tax Law Office of David W. Klasing online.
