IRS Audit Representation

The IRS conducts audits related to your federal individual or business tax returns. Sometimes the IRS conducts audits completely at random, while other times they may be triggered by activity on your returns that makes an IRS computer and the agent your audit is assigned to suspect underreporting of taxable income, and the associated underpayment of taxes, or the claiming of exemptions you do not qualify for. The IRS is typically permitted to look back over 3 years of your returns and related documents during an audit, but this can sometimes be extended to 6 years or even more in serious cases. Note: There is an unlimited statue of limitations where fraud is discovered or where a return is never filed in the first place.

An IRS audit is typically conducted in one of three ways. The first possibility is a correspondence audit. This type of audit is initiated when you receive a letter from an IRS auditor asking you to supply information, such as your books, records, and other documents, to back up the claims made on your tax returns. The audit will be conducted remotely, entirely through correspondence between you and the IRS. A tax attorney can help you prepare the necessary documents and deal with any ramification for mistakes made on the initial returns.

The second possibility is an office audit. This is similar to a correspondence audit except the letter you receive will ask you to come into the IRS office with the requested records and documents for an agent to review them in person. You should always have a tax lawyer prepare you for this meeting and come with you to the meeting or better yet, appear on your behalf. The third possibility is the most serious type of audit, a field audit, for which you need to engage the services of a tax attorney immediately to mitigate potentially serious civil and even criminal tax consequences. A field audit involves agents coming to your place of work or your home to look through your records themselves.

Types of IRS, CDTFA, EDD or FTB Audits

An IRS audit is typically conducted in one of three ways. The three traditional types of audits are correspondence audits, office audits, and field audits. When you inform your dual licensed San Diego Tax Attorney & CPA that you have been targeted by the IRS, CDTFA, EDD or FTB in an audit, likely the first question that they will ask is which type of audit you are facing, so it is important that you identify which one you are facing by examining the notice you received.

Correspondence Audit

The first possibility, a correspondence (or “mail”) audit, is the most common and least invasive form of government tax investigation. This type of audit is initiated when you receive a letter from an IRS, CDTFA, EDD or FTB auditor asking you to supply information, such as your books, records, and other documents, to back up the claims made on your tax returns. The audit will be conducted remotely, entirely through traditional mail, e-mail, fax, and phone correspondence between you (and your dual licensed Tax Attorney & CPA) and the IRS, CDTFA, EDD or FTB. A dual licensed Tax Attorney & CPA can help you prepare the necessary documents and deal with any ramification for mistakes made on the initial returns, usually yielding a resolution of your case within three to six months.

Office Audit

The second possibility is an office audit. This is similar to a correspondence audit, except that the letter you receive will ask you to come into the IRS office with the requested records and documents for an agent to review them in person. You should always have a tax lawyer prepare you for this meeting and come with you to the meeting or better yet, appear on your behalf. If all requests are met and no further issues develop, the timeline for resolution is three to six months from the office visit.

Field Audit

The third possibility is the most serious type of audit, a field audit, for which you need to engage the services of a tax attorney immediately to mitigate potentially serious civil and even criminal tax consequences. A field audit involves agents coming to your place of work, your home, or both to look through your records themselves. Field audits may take over a year to resolve, and some correspondence audits or office audits where the target does not fully cooperate may turn into field audits at the government’s discretion.

California Franchise Tax Board (FTB) Audit Representation

Aside from filing a federal income tax return with the IRS, you must also file a state income tax return with the California Franchise Tax Board (FTB) if you are a California resident or have enough California source income. Any audits related to your state personal or business income tax return will also be handled by the FTB.

Independent audits conducted by the FTB ordinarily arise over similar issues as an IRS audit but can originate because of state-specific issues like residency. Just because an audit is being conducted by the state rather than the federal government does not make it any less serious. You will still want to hire an experienced tax attorney to help you reconstruct the necessary documentation, correct any mistakes made with as few repercussions as possible, and work out a reasonable payment plan for any money you do owe.

California Employment Development Department (EDD) Audit Representation

The California Employment Development Department (EDD) conducts audits generally related to the state payroll tax. In addition to collecting federal payroll taxes, every employer in California is required to collect state payroll taxes from their employees’ paychecks and to remit them to the proper state agency. Failure to collect such taxes or failure to properly remit them could result in severe civil or criminal tax penalties for you and your business.

One of the most prevalent issues in EDD audits is determining whether you have properly classified those who work for you as employees vs. independent contractors. Employers are not required to collect payroll taxes for independent contractors like they are with employees. However, there are strict regulations about who can and cannot be labelled as an independent contractor. A tax lawyer can help you determine whether you have properly classified such employees and work to mitigate any damages from improper classification, such as by showing that the misclassification was an unintentional error rather than a willful action. This is much more difficult in a post AB5 environment.

California Department of Tax and Fee Administration (CDTFA) Audit Representation

The California Department of Tax and Fee Administration (CDTFA) conducts audits related to state sales taxes. Sales taxes can be tricky, as the amount business are required to charge may change depending on the locality out of which they operate, the type of product they sell, and where the people buying the product are located. In industries where failing to charge sales tax, underreporting sales, or collecting but not remitting sales tax is common, these audits are almost guaranteed to eventually occurs to ensure compliance.

CDTFA audits can be very intrusive and can by your worst nightmare if you have been underreporting cash sales. You may be required to produce receipts and other records of every sale you have made to show that you have been properly charging sales taxes and remitting them to the proper authority. A tax lawyer can help you gather these records, deal with any issues related to underreporting, and make sure any required protest challenging a finding of owed sales taxes are filed in a timely manner.

International Tax Attorneys in San Diego, CA

The Internal Revenue Code and related regulations on foreign information reporting are chock full of financial traps for the unwary, particularly when it comes to the regulation of global income. Unlike most nations, the United States taxes on the basis of citizenship rather than physical residence, creating foreign income reporting requirements for the millions of Americans who have bank accounts, business accounts, or other sources of taxable income overseas.

If you maintain an offshore account in Australia, Ecuador, Hong Kong, Luxembourg, Mexico, the Philippines, Saudi Arabia, Singapore, Switzerland, the United Kingdom (U.K.), or any other foreign countries or territories, you may be required to file a Foreign Bank Account Report, or “FBAR” (FinCEN Form 114), file Form 8938 (Statement of Specified Foreign Financial Assets), file Form 5471 (Information Return of U.S. Persons With Respect to Certain Foreign Corporations), and/or meet additional tax requirements for U.S. expats and citizens abroad. Be advised that failure to meet the applicable requirements could lead to the imposition of civil penalties, or, in the case of suspected tax fraud, a referral by the Internal Revenue Service (IRS) to the Department of Justice (DOJ) for further investigation – and potential prosecution.

Our team of International Tax Attorneys, which includes International FBAR Lawyers, International Estate Planning Attorneys, and Tax Lawyers for Expats, has represented numerous account holders who would have been facing large fines – and in some cases, years of imprisonment – for noncompliance with foreign account reporting requirements. We devote a substantial portion of our tax practice to assisting taxpayers with Offshore Voluntary Disclosure, Expat Streamlined Disclosure, and Domestic Streamlined Disclosure procedures.

San Diego Criminal Tax Defense Attorneys Handling Tax Evasion Charges

Willful tax evasion is a serious offense that can lead to the imposition of Federal and California criminal charges, fines, IRS restitution, prison time, supervised release, and, in cases involving CPAs, tax preparers, or anyone licensed under a state’s business and professions code, career-destroying professional sanctions. Tax evasion charges may arise from the willful underreporting of income, omission of income, improper claiming of tax credits or deductions, failure to file a return, or other attempts to conceal taxable income. In addition to willful evasion of assessment and/or payment and willful failure to file, other commonly charged tax crimes include willful failure to collect or pay over tax (26 U.S. Code § 7202), making false statements (26 U.S. Code § 7206), and interfering with the administration of federal tax laws (26 U.S. Code § 7212).

Even if it is determined that the taxpayer did not violate the law intentionally, the IRS is likely to impose costly civil penalties. Working with an Experienced Tax Preparer can help you avoid such tax issues before they arise. However, if you have already found yourself at the center of an indictment, audit, or investigation, our Tax Defense Attorneys and Tax Evasion Lawyers are ready to fight aggressively in your defense.

IRS, FTB, EDD and CDTFA (BOE) Audit and Appeals Representation in San Diego

Tax audits, which are also called “examinations,” can be conducted by federal agencies such as the IRS, or by state tax authorities. In California, the Franchise Tax Board (FTB) reviews state income tax returns and administers state tax income tax laws in accordance with the California Revenue and Taxation Code.

Audits carry several dangers for taxpayers. Of course, there is the possibility that additional tax, penalties and interest will be assessed, increasing the taxpayer’s tax obligations. Of even greater concern is the possibility that the IRS, FTB, EDD or CDTFA will detect willful misstatements or omissions in the taxpayer’s tax filings, leading to at best additional tax, penalties and interest, and at worst, the potential for criminal tax prosecution. The greatest danger lies in a type of audit known as an “egg shell audit,” which is an audit of a tax return that contains egregious errors, such as significantly understated income.

Our IRS Tax Audit Lawyers can prepare you for an audit, negotiate with the IRS on your behalf throughout the audit process, and, if you are dissatisfied with the results of the audit, potentially aid you in “appeals,” or the process of challenging an auditor’s findings and where necessary, Tax Litigation. Both state (FTB) and federal (IRS) audits may be appealed, though strict procedural rules apply. Our IRS Audit and Appeals Lawyers or FTB Tax Audit Lawyers are happy to answer your questions about state or federal tax appeals, the rules for appealing an audit, and other audit-related issues, including worker classification audits, California and federal employment tax audits, foreign account audits, California sales tax audits, and more. Additionally, our Bitcoin tax attorneys can represent you in a cryptocurrency audit if you have been affected by the recent Coinbase summons.

Payroll, Employment, and Business Tax Lawyers in San Diego

S and C Corporations, Partnerships, LLC’s and other business entities are subject to some of the most complex and elaborate provisions contained within the U.S. Tax Code. Even highly experienced business owners can find themselves adrift in the sea of regulations – much to the financial detriment of the company he or she has worked so hard to make successful.

At “best,” failure to comprehend the thousands of nuances contained within the Tax Code can lead to missed financial opportunities – and at worst, could subject the business owner to personal liability for unpaid federal taxes, such as Social Security and Medicare taxes (FICA, payroll, or trust fund taxes), excise taxes, and railroad retirement taxes. In either scenario, the end result is financial harm: harm which could have been avoided with skillful tax guidance.

Do not allow your business to be compromised by unforeseen tax issues. Ensure that you are complying with the Tax Code and using its provisions to your advantage by consulting with our Business Tax Attorneys and employment tax attorneys in San Diego. We can assist you with Entity Selection, Business Succession Planning, compliance with California sales tax laws, and other tax matters affecting S corporations, C corporations, limited liability companies (LLCs), non-profit organizations, sole proprietorships, partnerships, and other entities.

How Do I Choose a Dual Licensed Tax Lawyer & CPA in San Diego?

When you require legal tax counsel to help you through your current tax situation, you will want to take a few factors into account. You will want representation that can help you in every facet of your current and future circumstances. It can also be useful to have that representation be geographically close to you so that you can benefit from local knowledge and ease of obtaining in-person assistance.

Multi-Faceted Representation

Tax issues are complicated, and the world of legal tax representation is very broad. Therefore, many tax law services may focus their practice on specific areas of representation. This may be good to help resolve an immediate issue at hand, but you should be aware that tax issues which develop along the way may extend outside the scope of a practitioner’s area of expertise. In these cases, you may have to seek out a new source of services. This could add to your costs, take up more of your time, and potentially lead to errors in miscommunication that could compound your problems.

Fortunately, the Tax Law Offices of David W. Klasing boasts the services of dual licensed Tax Attorneys who are also Certified Public Accountants (CPAs). This gives us the advantage of being able to assist you in every area of your tax situation, all the way from preparing valid and effective tax reduction strategies to representation during standard civil audits and possible IRS, CDTFA, EDD and FTB criminal tax investigations or eggshell and reverse eggshell audits.

San Diego-Specific Focus

Taxpayers in need of representation may realize many benefits from having their chosen tax representation be in close proximity to them. Tax attorneys who are not local to their clients may not be as familiar with the state and municipal tax provisions that affect the client. They may also have a harder time providing in-person representation at hearings or audits, where clients can benefit from their attorney’s presence the most. David Klasing is an instrument rated licensed private pilot that owns a very fast but cost-efficient airplane that enables him to be in San Diego in as little as 45 minutes once airborne.

The Tax Law Offices of David W. Klasing provides services to clients throughout the State of California, including the City of San Diego. Our clients benefit from the fact that our seasoned dual-licensed Tax Attorneys and CPAs are experienced dealing with San Diego tax issues and can get to their residence, place of business, or local IRS field office with ease if necessary.

Experienced San Diego Tax Lawyers, CPAs, and EAs Can Help

From tax planning and preparation to vigorous criminal defense – Bitcoin tax questions to estate planning for your family – the nationally recognized Tax Attorneys and CPAs at the Tax Law Office of David W. Klasing possess the skill, the knowledge, and the decades of hands-on experience to deliver the comprehensive support that your tax matter requires. We have worked with taxpayers from all walks of life, ranging from high net worth individuals and venture capital investors, to young couples with tax questions about buying a home for the first time. No matter what your tax issue involves, we can guide you down the path toward an effective and efficient resolution.

Contact us online to schedule a reduced-rate consultation, or call the Tax Law Office of David W. Klasing at (800) 681-1295 for immediate assistance. You can also reach our San Diego branch directly by calling (619) 780-2538. Conveniently located to serve residents of San Diego and its surrounding suburbs, our appointment only San Diego office is located at the following address:

501 West Broadway
Suite 800
San Diego, California, 92101