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A federal tax audit poses numerous financial and legal dangers, even for a taxpayer who believes himself or herself to be in compliance. When the audit concludes, the taxpayer may be told he or she owes unpaid taxes to the IRS, on which interest may have been accruing for months. In addition to interest charges and unexpected tax liabilities, IRS audits can also lead to penalties, such as failure-to-file or failure-to-pay penalties. Depending on what the auditor finds, he or she could even refer the case to the IRS Criminal Investigation Division (IRS-CI), which could cause the taxpayer to be charged with tax evasion or related offenses.See our Audit Representation Q and A Library Because of the disastrous outcomes that can result from a tax audit, it is imperative for taxpayers to take all possible measures to protect themselves. At the Tax Law Office of David W. Klasing, we are Oxnard IRS attorneys who blend civil and criminal tax expertise to defend our clients effectively. From the day you receive your audit notification letter from the IRS, to the day you notified of the audit’s results, our dedicated tax attorneys will be there to fight in your corner and uphold your rights. Our founding attorney, David W. Klasing, possesses more than a decade of public auditing experience, granting our award-winning tax firm a wealth of strategic insight into the IRS’ auditing tactics. If you need federal tax audit representation in Oxnard, CA, look to our office for 24-hour support.
Oxnard IRS Audit Lawyers
The Oxnard Tax Law Attorneys, CPA and EAs at The Tax Law Offices of David W. Klasing are ready, willing and able to defend and protect you during your IRS audit and where necessary, any subsequent appeal, litigation or collection action. If the IRS has contacted you about an audit, your first call should be to an Experienced Tax Audit Lawyer. Contact our tax law offices today at 805-617-4566 or 800-681-1295 or reach out to us online to schedule a reduced rate initial consultation at our Oxnard office, or another of our convenient locations across Southern California
What Are the Chances of Being Audited by the IRS?
Each year, the IRS conducts approximately one million tax audits, which means only a fraction of a percent of the U.S. population is selected for federal auditing. However, while the number of audits is proportionally low, some taxpayers are more likely to be chosen than others. Examples of audit triggers that increase your odds of selection are discussed in the section below. Some triggers are innocuous, such as the salary you earn or the industry you work in, while others are more likely to be related to tax fraud or noncompliance, such as failures to file returns or report income.
What Triggers a Tax Audit?
Some audit triggers involve demographics or factors you cannot change, such as how much you earn or the type of business you operate. For instance, you are more likely to be audited if you are self-employed, have your own dental or veterinary practice, or operate a business that conducts most of its transactions using cash. In some cases, taxpayers are even selected at random.
That being said, many federal audits are rooted in suspicious financial activity. Common examples of tax audit triggers include failing to file tax returns, underreporting your taxable income, concealing some accounts while reporting others, lying to IRS agents, padding business expenses, claiming improper tax credits, or transferring assets – for instance, to a spouse or business partner – in an effort to avoid foreign account disclosure requirements, such as the FBAR requirement.See our 2011 OVDI Q and A Library
Facing an IRS audit can be a significant burden that takes time out of your professional and personal life and can be extremely stressful. Simply because your faced with an IRS audit is not an automatic determination that you did something wrong, but the IRS often treats the subject of an audit with suspicion and mistrust. Having an IRS Tax Audit Attorney at your side during an IRS audit can benefit you greatly. A Tax Attorney will place him or herself between you and the IRS, and where appropriate, they will argue that the tax positions you took that are currently under audit were justified, and attempt to dissuade the IRS from expanding the scope of the audit into other areas of the return or additional tax years. Where large errors are found on your audited returns, he or she will attempt to cast those errors in a light of negligence rather than willful intent, where the latter could result in a civil fraud penalty at best or prosecution for tax crimes at worst.
If you live in the Oxnard area, our Experienced Tax Attorneys are ready, willing and able to help. The Tax Law Offices of David W. Klasing employs highly educated Tax Attorneys, CPAs, and EAs, that have years of experience of doing damage control in audits to protect your liberty and net worth. For a reduced-rate initial consultation regarding your audit, call our Tax Law Office today at 800-681-1295 or reach out to us online. Our Oxnard office is conveniently located in the Riverpark area, just off US 101 and Oxnard Boulevard.
Why am I Facing a Tax Audit?
An IRS audit is an examination of a person (or person’s) – or a business’s – tax and other financial records. The goal of an audit is to determine whether or not the individual’s or company’s taxes were properly filed, and whether the right amount of income tax was paid.
An IRS audit is an examination of a person (or person’s) – or a business’s – tax and other financial records. The goal of an audit is to determine whether or not the individual’s or company’s taxes were properly filed, and whether the right amount of income tax was paid
To select individual taxpayer and businesses to audit, the IRS typically utilizes two general methodologies. First, the IRS statistically analyzes related groups of business tax returns sorted by the North American Industry Classification System utilizing a closely guarded computer algorithm to generate a differential scoring. This algorithm statistically looks for potential errors by finding discrepancies in items of tax return income, deductions and credits that statistically deviate too far from what the algorithm considers “normal” based on the pool of tax returns it is statistically analyzing. For example, if you had exceptionally high deductions or credits, the algorithm would add to the differential score it gives the return each tax return line item that it find’s statistically suspicious. The worst score a tax return can be given is a 999, then a 998, 997 etc.… The worse the differential score a return gets the higher the likelihood it will be audited.
Alternatively, if the IRS choses to audit a business, partner, shareholder, investor, or someone else heavily related to your business or to you individually from a tax perspective, they may choose to audit you as well, because of that relationship. The rationale for this is that the IRS is concerned that related business stakeholders could be part of a group effort to commit tax fraud or other civil tax violations. Moreover, investigating or auditing third parties related to an identified tax crime or serious underpayment can help recoup the associated tax loss.
What if I Disagree with the Results of My Tax Audit?
Depending on the situation, you may have a basis to dispute, or “appeal,” the results of your IRS tax audit. However, before you begin the IRS tax audit appeals process, you should discuss your options with an experienced Oxnard Tax Audit and Appeals Attorney, who can advise you of your rights and responsibilities, represent you before the IRS, and walk you through each step of the often-convoluted appeals process.
The first stage of this process is to either draft an effective “protest letter” or tax court petition setting forth your legal disagreement with the IRS, the differences in either the law or facts that are the basis for your disagreement, and the relevant facts and laws to support your argument. Note that, if the amount in dispute is $25,000 or less, you may file a Small Case Request rather than appealing the audit. Your Tax Audit and Appeals Attorney in Oxnard can help you determine and pursue the appropriate course of action.
How do I Avoid Penalties for a Tax Audit in California?
Because of the secretive and highly sophisticated statistical IRS audit selection process, it is very rare that you face an IRS tax audit where you did absolutely nothing wrong. An IRS audit ordinarily results, to some extent, in your deductions and tax credits found to be overstated, or that your income was understated (the latter is much more serious). While this does not automatically result in a finding that you have been involved in some sort of conspiracy to defraud the United States, all it takes is a $5,000 understatement of tax liability to face a 20% negligence penalty. One potential way to possibly avoid this automatic penalty is to argue that you reasonably relied on a tax professional where taking the original tax position. If the IRS Revenue Agent suspect that you committed tax fraud, they could also attempt to assess a 75% civil fraud penalty, and or, refer the case for potential criminal tax investigation and subsequent prosecution.
In order to achieve the most optimal outcome in your audit, (i.e. the lowest additional assessment of tax, penalties and interest and a purely civil tax, as opposed to a criminal tax, disposition of your case) you should consider hiring the Tax Law Offices of David W. Klasing. Our Tax Attorneys, CPA and EAs can help protect your liberty and your net worth from baseless accusations by the IRS where they get either the facts or the law wrong in your audit which is a very common occurrence in our experience.
If the IRS does find issues with your original personal or business returns, our Tax Lawyers, CPAs and EAs will endeavor to minimize the tax, penalties and interest and other negative effects resulting out of your audit. If the IRS is unwilling to agree to a mutually acceptable audit outcome, our firm will appeal the IRS’s attempted assessment and prove to the government in the appeals process where it has gotten either the law or the fact wrong.
Our Tax Professionals are highly experienced in the IRS appeals process including fast track mediation, negotiating with the IRS appeals department, and in negotiating with IRS Chief Counsel’s Office to achieve a mutually agreeable settlement where litigating against the IRS before the U.S. Tax Court. We are very adept at proving that the IRS’s flawed audit findings were based on an either an incorrect interpretation of the Tax Code or other primarily authority, or were flawed based on an incorrect interpretation of the client’s facts. Ultimately, the protection that a Tax Attorney can offer is far superior than that of a CPA, EA or C.T.E.C. certified preparer, especially where there is a need to protect confidential communications through the Attorney Client Privilege where tax fraud may be an issue.
How Do I Dispute the Results of a Federal Audit?
The IRS provides various channels for taxpayers to dispute, or “appeal,” improper auditor findings. If you do not agree with the results of an IRS tax audit, you may request appeals by submitting the appropriate materials (collectively called your “protest letter”), which should include your contact information, a statement expressing your wish to appeal, the approximate dates at issue, an explanation of the facts at issue, your specific disagreements with each fact, and perhaps most importantly, your factual or legal basis for disputing each fact. Our IRS audit appeals attorneys are highly familiar with this process and will help you to prepare a stronger, more compelling protest letter, increasing your odds of success. Depending on whether the amount in question is over or under $25,000, it may be appropriate to, as an alternative to a protest letter, file a Small Case Request.
Oxnard IRS Federal Tax Audit Lawyers + CPAs Serving Southern California
Even if you believe that you have complied with the law and are “in the clear,” it is wise to treat an audit notification seriously by conferring with a trusted IRS attorney as soon as possible. Audits have a way of growing in depth and scope, and in some cases, can even culminate in IRS criminal investigations.
If you or your business has been selected for a federal tax audit, including a federal income tax audit, federal employment tax audit, or foreign account tax audit, the best course of action is to contact a tax attorney for confidential and nuanced support. Call our Oxnard tax office at (805) 617-4566 to speak with an attorney confidentially in a reduced-rate consultation, or contact the Tax Law Office of David W. Klasing online. Note: All consultations in our Oxnard satellite office are by appointment only. See our Employment Tax Law Q and A Library Note: If you have concerns about the privacy of our initial or subsequent communication and are unable to easily travel to our Irvine / Orange County Main Office, consider scheduling a GoToMeeting to safely and securely establish an initial or maintain an existing attorney client relationship. With end-to-end encryption, strong passwords and top-rated reliability, no one is messing with your meeting. To schedule a reduced rate initial consultation via GoToMeeting follow this link. Call our office and request a GoToMeeting if you are an existing client. We are generally happy to travel to any of our appointment only satellite offices for a subsequent meeting in appropriate circumstances once a relationship is established via a signed engagement letter and the payment of an initial retainer or where enough retainer is available where a current client to cover the reasonable travel time and time required for the meeting.
Will it cost me more to hire the Tax Law Offices of David W. Klasing, who’s main office and the vast majority of the firm’s staff is located in Irvine California, but an appointment only Satellite office is close to my location, as opposed to a local company? Absolutely not!
