Why Should You Use a Dual Licensed Tax Attorney and CPA in Sacramento?

Recent government action suggests that IRS audits will occur more frequently and go further in-depth than ever before. This aggravation is based on the ever-widening tax gap, or the difference between total tax revenue owed and total taxes paid annually. The IRS is concentrated on changing this narrative. While the renewed charge to investigate and prosecute tax evasion will almost assuredly lead to the discovery of more tax cheats, it will also likely entangle honest taxpayers who made simple mistakes in the process.

Simple mistakes can quickly snowball into major issues when it comes to taxes. The best way to head off these problems early is to seek the counsel of a dual-licensed Tax Attorney and CPA. Your dual licensed Tax Lawyer & CPA can help you assess your past and upcoming filings for any potential issues. If you do have any history of noncompliance, your dual licensed Tax Lawyer & CPA may be able to help you reduce or avoid civil and criminal penalties by engaging in the IRS Voluntary Disclosure Program. However, to avoid doing any additional harm, you should never attempt to voluntarily disclose past noncompliance without first seeking advice from the Tax Law Offices of David W. Klasing.

If you are already facing a civil audit, eggshell audit, reverse eggshell audit or a criminal tax investigation, it is imperative to get legal help if you haven’t done so already. No matter what type of audit, enforcement action or criminal tax investigation you are facing, our dual licensed Tax Attorneys & CPAs can appear with you or potentially in your place so that you can avoid incriminating yourself further or exposing yourself to an overly stressful and intimidating situation.

Types of Audits the IRS May Initiate

The IRS utilizes several different types of audits when examining or investigating taxpayers. Correspondence audits, office audits, and field audits are audits that differ by where and how they take place. Correspondence audits occur through the mail, and office audits occur at an IRS revenue agent’s office. A field audit is much more detailed and occurs at the taxpayer's home or place of business. It is important to have a dual licensed Tax Lawyer & CPA to interface with the IRS in all these audits; however, the field audit is particularly risky since the IRS agent could gain access to huge amounts of financial information that they might aim to use against you and your colleagues.

The IRS can conduct either a civil tax audit or a criminal tax investigation. Typically, an IRS Special Agent will conduct a criminal tax investigation. Special Agents from the IRS Criminal Investigation division will identify themselves and read the taxpayer their non-custodial Miranda Rights. However, evidence for a criminal tax investigation can be collected during a civil audit and later referred for criminal tax investigation. Occasionally, a criminal tax investigation will occur concurrently with a clandestine civil audit, thus being obscured by the civil audit. It is possible that a seemingly benign civil audit can lead to potential criminal tax liability. That is why involving a dual licensed Tax Lawyer & CPA early in any type of audit is the most effective way to identify underlying criminal tax issues in your audit and take action to mitigate any resulting criminal tax exposure.

Field Audits

Field audits conducted at a business entail an IRS representative reviewing financial records, interviewing employees, and even touring the offices or other facilities of the business. A large business with many physical locations and employees could undergo an audit like this for weeks or months.

The IRS will formally request the documentation it wants to review during a field audit, but the total information they could discover while on site is much larger than usually provided in a correspondence or office audit. Employee interviews can unintentionally yield a tidal wave of potentially damaging information. Employee interviews cover various business-related topics, and each question is designed to elicit information for further investigation. Legal counsel can prepare interviewees so that they understand how best to respond to the IRS revenue agent without providing more information than necessary and how to respond to inquiries in a manner that mitigates any risk inherent in the client’s fact pattern.

A dual licensed Tax Lawyer & CPA should be present throughout the entire field audit, especially in every owner or employee interview. If a line of questioning in an audit begins to sound like a clandestine criminal tax investigation, our attorneys will intervene to achieve damage control. Our attorneys will interface with IRS representatives on your behalf and monitor the audit to identify potential risks and implement appropriate mitigation strategies.

Eggshell Audits

Taxpayer’s who intentionally or inadvertently materially understate revenue, overstate deductions, or claim credits they are not entitled to that have not voluntarily disclosed the misstatements are at risk for an eggshell audit. This is the industry term for a civil tax audit where the taxpayer knows about an material compliance issue underlying the returns under audit, but the IRS representative does not. As a result, the taxpayer, and frequently their representative, is figuratively walking on eggshells around the auditor to avoid the issue from coming to light, hence the colloquial description of this type of audit. When such an audit occurs, it may be tempting to lie to that auditor to attempt to avoid discovery or disclosure of the underlying noncompliance. However, lying to a federal agent is a felony.

If an audited tax return contains material, intentional or inadvertent noncompliance, it is extremely beneficial to seek out the counsel of our dual licensed Tax Lawyers & CPAs at the outset of the audit. Whether the error was intentional or accidental, you should proactively address the error before the auditor discovers the issue. Our attorneys can evaluate the error to determine if it is a material misstatement, present options to remedy it, and communicate with the IRS.

One of the best strategies to handle an eggshell audit is to avoid ending up in that situation altogether. Hiring a dual licensed Tax Lawyer & CPA before audits occur can assist with identifying issues and developing a plan to address them. There could be many areas of uncertainty in complex tax returns, especially for companies with foreign assets. Our dual-licensed Tax Lawyers & CPAs can advise on these grey areas of tax law before filing tax returns to minimize the risk of non-compliance and subsequent audits.

Reverse Eggshell Audits

An audit in which the IRS revenue agent secretly seeks confirmation of the intent a taxpayer had when they materially misstated their returns is informally known as a reverse eggshell audit. This audit typically comes before a criminal tax investigation and is dangerous because the auditor can collect evidence for the subsequent or simultaneous criminal tax investigation without the taxpayer knowing the IRS already considers it a criminal tax case. This practice eliminates notice of the clandestine criminal tax investigation and does not allow taxpayers to utilize their constitutional criminal defense rights against self-incrimination and unreasonable searches and seizures.

While part of the definition of a reverse eggshell audit is that the taxpayer is unaware of what the auditor is seeking, a dual licensed Tax Lawyer & CPA can look out for signs of this type of audit. Our experienced attorneys have witnessed enough high-risk audits to recognize when an auditor’s actions imply an ulterior motive. Questions that focus on the intent of a particular tax-related choice, expanding the tax return years under audit, and asking for excessive copies of information could all indicate that the civil audit is obscuring or becoming a criminal tax investigation. Once a civil auditor refers a case for criminal tax investigation, they may suddenly stop their audit and become unreachable. Additionally, an IRS Special Agent may secretly continue the audit or openly take the place of the civil tax auditor.

Such unusual audit occurrences indicate that a criminal tax investigation has begun or is being initiated. At this point, our dual-licensed Tax Lawyers & CPAs can shift from monitoring an audit to actively defending against criminal tax allegations. Our attorneys can help you avoid being blindsided by a criminal tax investigation, mitigate existing risks, and protect your rights as necessary. In addition to tax deficiency payments plus interest, audits can result in additional financial penalties, criminal tax charges, increased future scrutiny, and, worst-case scenario, prison time. These can be huge consequences for a taxpayer. Do not face these risks alone – ask our dual-licensed Tax Lawyers & CPAs for help today.

How Do I Choose a Tax Lawyer or CPA in Sacramento?

For many taxpayers seeking legal help, their concerns may range from proper filing under complex circumstances, amending past filings to regain compliance, or defending against potential or upcoming audits or IRS, FTB, CDTFA or EDD criminal tax investigations. In many cases, the taxpayer may be dealing with more than one of these issues, even if they do not realize it at the time.

For this reason, the legal representation that the taxpayer seeks out should be able to handle all of their potential issues. Many tax law firms specialize in one or two areas but do not have the necessary experience in other areas. This could leave the taxpayer having to seek out separate counsel to help them with other issues. This additional step could lead to higher costs, additional wasted time, and potential miscommunication errors, ego battles and territorialism between law and accounting firms that could exacerbate the existing issues.

Therefore, when considering who to use for your tax law representation, you should carefully consider all the services that your potential service providers can provide. This is why the Tax Law Offices of David W. Klasing is your best option. Our firm boasts Tax Attorneys who are also Certified Public Accountants (CPAs), meaning that we have experience in various areas of multidisciplinary tax law. Our circumspect approach provides our clients the benefit of having a one-stop shop for all their tax planning, compliance, and controversy needs.

Another benefit of our services that you should consider is our localized operations. The Tax Law Offices of David W. Klasing operates throughout the State of California, including at our Sacramento offices. Being geographically close to our clients means we can easily accommodate short-notice meetings or in-person representation at office and field audits or court hearings.  David Klasing is an instrument rated and licensed private pilot and owns a very fast yet affordable airplane that enables him to travel to virtually any point within California with two hours of getting airborne.  The firm does not typically charge for travel time.

Contact the Tax Law Offices of David W. Klasing in Sacramento Today

Our skilled taxpayer advocates combine more than 20 years of experience representing taxpayers before federal judges, auditors from the Internal Revenue Service (IRS) and Franchise Tax Board (FTB), California Department of Tax and Fee Administration (CDTFA formerly know as the BOE), Employment Development Department (EDD), Administrative Law Judges (ALJs) with the Office of Tax Appeals (OTA), and others. Whether you are potentially facing felony tax charges, have questions about tax planning for your new business, need guidance on unfiled or delinquent tax returns, or require assistance with another tax matter, such as buying commercial property or passing down an inheritance, you can expect meticulous, aggressive, and client-focused service when you are represented by the Tax Law Office of David W. Klasing.

To arrange a reduced-rate initial consultation with an experienced tax attorney in Sacramento, contact our main offices by calling (916) 290-6625 or (800) 681-1295 or visit our contact us page online to book your appointment. Our appointment only Sacramento Tax Office is conveniently located at the following address:

180 Promenade Circle, Suite 300, Sacramento, CA 95834

Why Hire a Dual Certified Sacramento Tax Attorney and CPA