San Francisco, CA Tax Audit Lawyer
Contacting an experienced tax audit defense attorney should be your first action upon receiving an audit notice in San Francisco. Skilled and effective representation will be critical if you wish to emerge from the audit with minimal damage to your personal finances or business endeavors. This applies regardless of whether the audit is being performed by the Franchise Tax Board (FTB), the Employment Development Department (EDD), the California Department of Tax and Fee Administration (formerly known as the BOE), or, as taxpayer’s dread most of all, the Internal Revenue Service (IRS). All four of these agencies can deploy experienced and persistent auditors to investigate your history of tax compliance – sometimes as far as three years back, six years back, or even longer (back to the dawn of time) if fraud is proven to have occurred in an open tax year.
A San Francisco tax audit lawyer from the Tax Law Office of David W. Klasing can level the playing field by protecting your rights, negotiating with tax authorities on your behalf, and looking for ways to reduce any penalties, tax or interest assessments you may be facing due to the audit. We are also prepared to aggressively dispute auditor mistakes or procedural errors through the appeals, protest and litigation process. We stand ready willing and able to provide a vigorous defense if you are at risk of being charged with a tax crime as a result of the auditor’s findings. We will simultaneously attempt to minimize the risk of a subsequent criminal tax investigation taking place. Whether you need an attorney to represent you during an audit, to protest the outcome of an audit, or to defend you against audit / criminal tax investigation -related criminal charges, our award-winning tax team is ready to fight in your corner.
Why Was I or My Business Chosen to Be Audited by the IRS, EDD, FTB, or CDTFA?
There is a vast range of tax issues which can potentially trigger an audit. While many audits involve fraudulent or otherwise inaccurate income tax returns, examinations can also be triggered by failures to comply with state or federal laws governing employment and payroll (FICA) taxes, sales and use tax, excise taxes, property taxes, or other types of taxes. Audits can also result from the failure to disclose offshore income and accounts, including foreign bank accounts, foreign trusts, offshore businesses and foreign mutual funds. Examples of tax errors or financial scenarios that may cause a taxpayer or business entity to be audited include, but are not limited to, the following:
- Being self-employed or operating a sole proprietorship
- Doing business with companies or individuals who have been audited
- Failing to disclose all sources of taxable income, including both domestic and foreign income
- Failing to file state, federal, or business tax returns
- Failing to pay taxes, including failure to pay estimated tax
- Failing to turn over withheld employee earnings
- Falling within certain income ranges
- Forgetting to complete areas of a tax return or other tax form
- Improperly claiming tax credits, exemptions, or deductions
- Intermingling business and personal expenses
- Misclassifying workers to avoid paying FICA taxes
- Underreporting income on tax returns
- Using another taxpayer’s personal information to complete a tax return
Types of Tax Audits in San Francisco, CA
Audits are not “one-size-fits-all.” On the contrary, the IRS conducts three different types of audits in California: the correspondence audit, the office audit, and the field audit. The IRS will choose one of these procedures based on the nature and complexity of the underlying tax issue. Therefore, it is crucial to determine which type of audit the taxpayer has been selected to undergo.
- Correspondence Audit – As the term suggests, correspondence audits are conducted via mail correspondence with an auditor. Generally, these audits are triggered when IRS computer software detects an anomaly or omission between data on a filed return and information received from third parties on 1099’s W2’s ect. While correspondence audits are initially less cause for concern than field or office audits, they can rapidly escalate into more serious audit procedures if the taxpayer fails to respond appropriately.
- Office Audit – Office audits are less serious than field audits, but more serious than correspondence audits. Unlike correspondence audits, which are carried out remotely, office audits take place in person. They are called “office audits” because they are conducted in IRS offices. The San Francisco IRS office is located at the following address:
450 Golden Gate Avenue
San Francisco, CA 94102
- Field Audit – If you are chosen for a field audit, you should be on red alert. Field audits are generally reserved for situations in which the IRS believes that more serious misstatement including the possibility that fraud has occurred. The auditor may come to your business, or even your home, looking for evidence of misstated taxes, including potentially tax fraud or tax evasion.
Criminal Tax Investigations and Eggshell Audit Defense
“Eggshell audit” is an industry term referring to any type of tax audit – whether a correspondence audit, an office audit, or a field audit – which uncovers “material” (significant) misstatements that the IRS believes to be fraudulent, or intentional ("willful"), rather than careless or negligent. An example might be a deliberate statement on the taxpayer’s California or federal income tax return indicating that the taxpayer earned $50,000 that tax year, when in fact, his or her true salary was closer to $70,000. Depending on the specifics of the situation, understatements of income are merely one among numerous “badges” (indicators) of fraud that the IRS auditor will be looking for, alongside issues like the concealment of records, inconsistencies in the taxpayer’s actions or statements, and the formation of companies that do not serve a legitimate business purpose.
Because eggshell audits are conducted exclusively in scenarios where the IRS believes fraud to be likely, they are far more likely to lead to criminal tax charges – sometimes misdemeanors, but more frequently felonies. Thus, like a field audit, an eggshell audit is cause for grave concern. If you have been chosen for an audit and suspect it is an eggshell audit in California, you are urged to seek immediate representation, not only to guide you through the audit itself, but to fight on your behalf to try and dissuade a criminal tax indictment. Our tax firm provides criminal tax investigation representation in both state and federal matters, including tax evasion, willful failure to collect or pay over tax, willful failure to file a return, willful failure to pay tax, lying to the IRS or other government agencies (“fraud and false statements”), obstruction of Internal Revenue laws, and other criminal tax offenses.
Hire a San Francisco Tax Audit Defense Attorney to Represent You
If you have been selected for auditing, you need to take the process seriously and begin mounting your defense as early as possible. The IRS, FTB, EDD, or CDTFA will not wait to start compiling data about you, which means you cannot afford to wait to plan your audit strategy.
David W. Klasing, founding dually licenses Attorney and CPA at the Tax Law Office of David W. Klasing, is an award-winning tax attorney with over 25 years of experience representing individuals, C corporations, S corporations, limited liability companies (LLCs), sole proprietorships, and other business entities. Moreover, Mr. Klasing is a former public auditor, enabling our tax team to craft targeted, hard-hitting audit defense strategies from the inside out. Furthermore, Mr. Klasing’s dual certification as an attorney-CPA affords his clients the attorney-client privilege, which is critical in complex audit or criminal tax investigation situations where seemingly civil matters have the potential to become criminal tax matters.
Do not wait to start preparing for your upcoming audit. To schedule a reduced-rate consultation with the San Francisco audit defense lawyers at the Tax Law Office of David W. Klasing, contact our tax firm online or call us at (415) 287-6568, or (800) 681-1295.