Panorama City, CA IRS Tax Audit Attorney
If you are facing a tax audit from the IRS, you do not need to face it alone. The IRS may seem intimidating and strict, but the agents who perform audits do not have the unilateral ability to throw you directly in jail, force you to pay extreme amounts of additional tax, penalties and interest, or ruin your financial life. There is a closely regulated process behind an IRS audit, and audited taxpayers have the right to be represented by their Tax Professional of choice.
The Los Angeles Tax Audit Defense Lawyers, CPAs and EAs at The Tax Law Offices of David W. Klasing have decades of combined experience in zealously working on behalf of our clients to fight the IRS, protect your net worth, your liberty, and where possible, prevent audits from interrupting your life. If you are just beginning the audit process, hiring an attorney from the outset puts you in the best position to achieve damage control. If the IRS has already reached a decision about your audit, it is not too late to appeal their decision with the aid of an experienced Tax Audit Appeals Attorney. Contact our Panorama City Tax Lawyers, CPAs and EAs for help with your tax audit, by calling 800-681-1295 or reach out to us online today.
Why am I being Audited?
The purpose of an audit is for the IRS to confirm that it is getting the proper amount of tax the law allows it to first assess and then collect. While the issue of whether the IRS “deserves” this much money is one that varies from person to person, they are nonetheless legally entitled to assess and then collect the proper amount of taxes as determined from your specific facts and circumstances.
The IRS uses computer algorithms to check that the amounts on your tax returns do not stray too far from the “norms” of an average tax like tax return. All returns of a specific type are analyzed together to establish the statistical norms for that type of return. However, everyone’s financial situation is different, and different people may be entitled to vastly different levels of tax credits and deductions. If you have a history of paying a very low amount of taxes, it does not automatically mean that you did anything wrong but a consistently low reported tax burden coupled with a high net worth and luxurious standard of living is a recipe for disaster.
The IRS may also manually trigger an investigation or audit if those around you are facing tax investigations or audits of their own. If third parties with a close involvement in your personal or business finances are under investigation for tax crimes, underpayment, or serious misrepresentations, they may want to confirm that the identified criminal noncompliance is not a widespread issue and that you are not part of a criminal tax conspiracy. This may mean undergoing a criminal tax investigation or audit yourself if your business partners, investors, or others with close ties are under audit or criminal investigation.
The IRS Tax Audit Process in California
The IRS usually contacts people who are to be audited by mail. The IRS does not use phone calls, and any initial attempts to reach you by phone may be attempts at scams. Talk to an attorney for help verifying whether the audit you face is legitimate in the first place before giving away any information. On the other hand, most criminal tax investigations begin with an unannounced interview regarding past tax positions where the special agents (wearing a gun and a badge) attempts to get the investigated party to lie in order to prove that they acted willfully in a subsequent trial. If you are approached by the criminal investigation division of the IRS, the best thing to do is to request that an attorney be present before you speak to them and say nothing and then contact our office immediately. Write down your version of what was discussed immediately while the conversation is still fresh in your mind. This will be rebuttal evidence if they try and event any facts in their notes of the event if there is a subsequent trial.
When the IRS contacts you, they will usually ask for you to produce certain documents and records to substantiate the returns being audited or investigated. Where a 25% or greater understatement of net income is proven in an open tax year, the IRS does have the power to reach back up to six years when auditing you, meaning you may need to produce tax records up to six years old. If your return contains Net Operating Loss or Capital Loss carryforwards the IRS can audit every return that generated the carryforward items or utilized the carryforward items with no statute of limitations. If you refuse to produce the historical returns or no longer have the records to defend them they will wipe out the carryforwards items which can result in huge income tax penalties and interest assessments. Ordinarily, audits are performed on tax returns from the three prior tax years. The IRS may want you to come to their office, or if your records are substantial, they may come to your home (or business, if the business is being audited).
Fighting the IRS During a Tax Audit
When the IRS finishes its audit it usually makes one of two determinations: 1) your taxes were properly filed and need no adjustment, or 2) your taxes were improperly filed and you must pay additional tax, penalties and interest. The first result is extremely rare as the IRS audit selection process tends to only result in taxpayers that potentially owe income taxes being selected in the first place. If the IRS does decide they believe you need to pay more taxes, the outcome is not yet written in stone. Through the appeals process, the IRS is often willing to negotiate down the assessment based on the perceived risk that they do not prevail in tax court. In the post assessment collection phase of the case the IRS may allow a discounted repayment in some situations where an Offer in Compromise is negotiated. In other situations, where the IRS’ determination is wrong because they have gotten either the law or the fact wrong, their decision can be either appealed through fast track mediation or litigated in Tax Court where the subsequent appeal is still unsatisfactory.
For the best results possible, in an audit or criminal tax investigation, it is vital that you hire a Tax Attorney as early in the process as you can to achieve damage control. A Tax Attorney may be able to explain to the IRS during their audit or investigation why certain tax decisions were made, and how they were legal at best and negligent at worst, which is far preferable to these actions being viewed as a badge of fraud, thus protecting your net worth and your liberty.
Appealing an IRS Tax Audit in Panorama City
If you do not agree with the outcome of your IRS tax audit, it may be necessary and appropriate to dispute the matter through the appeals process. If you believe the IRS got either the law or facts wrong in your audit, you should discuss your right to appeal with a Panorama City IRS Tax Audit Appeals Lawyer, who can guide you through each stage of the process.
To initiate this process, you will need to either draft and submit a written “protest letter,” also referred to as a “written protest,” in which you must explain the nature of your disagreement, the basis for your disagreement, and the facts and laws to support your disagreement or file a tax court petition. Your Tax Audit Appeals and Litigation Lawyer can help ensure that your protest letter or tax court petition is clear, comprehensive, does not cause the loss of any important appeal rights and sets up the best chances of your prevailing on the merits of your case. They will also advise you of your rights and responsibilities and provide representation before all departments of the IRS as the audit process evolves in the appeals process and an even help work out a collection alternative if you cannot full pay any resulting tax, penalties and interest following an audit, appeal or litigation.
Panorama City Tax Audit Lawyers
The Panorama City Tax Audit Attorneys at The Tax Law Offices of David W. Klasing are ready willing and able to defend you during your audit or criminal tax investigation and will fight the IRS where necessary to help protect your net worth and liberty. Our Panorama City office is located on Roscoe Boulevard, off I-5 and I-405. To schedule your initial, reduce rate consultation, call 818-935-6098 or 800-681-1295 or schedule online today.