Awards & Recognition
Receiving an audit notice can be a shock to the system. Regardless of whether the audit involves an individual taxpayer, or a business entity – a federal tax or state tax authority – income tax, payroll tax, sales tax, or another tax issue – there is always potential for negative outcomes to result. These outcomes may include the assessment of additional tax, the imposition of civil penalties, or even the potential for criminal tax prosecution, depending on the nature of the issue under examination / investigation.
Fortunately, state and federal laws give taxpayers the right to dispute, or “appeal,” the results of a tax audit in San Francisco, CA. Moreover, taxpayers can dispute the results of an audit appeal through tax litigation, which involves filing a lawsuit in U.S. Tax Court. The experienced, effective, and zealous tax attorneys at the Tax Law Office of David W. Klasing can guide you through either process, ensuring that your rights are protected at every step of the way.
San Francisco Audit Appeals and Tax Litigation Lawyers Settling IRS, CDTFA, EDD, and FTB Disputes
Most Californians associate audits with the Internal Revenue Service (IRS). However, a tax audit can also be initiated by various state agencies, including the Franchise Tax Board (FTB), the Employment Development Department (EDD), and the California Department of Tax and Fee Administration (CDTFA). The CDTFA, which was not created until 2017 with the passage of the Taxpayer Transparency and Fairness Act, now administers many of the functions that were previously overseen by the Board of Equalization (BOE).
Together, these four agencies conduct a wide range of tax audits, or “examinations,” into the financial activities of businesses and individuals. While a small number of these audits are based on random selection, the majority are triggered by problems, red flags, or anomalies, such as unfiled tax returns, tax credits that seem to have been claimed improperly, or business expenses that appear to be falsely inflated. Though less common, undisclosed foreign income can also give rise to an audit.
Our San Francisco tax lawyers have experience handling a broad range of appeals at the state and federal levels, and our team is eminently qualified to help taxpayers appeal all types of tax audits in California. Types of appeals we can assist with include:
- CDTFA audits
- Business tax audits
- EDD audits
- Eggshell and reverse eggshell audits
- FBAR audits (Foreign Bank Account Report) and other foreign account tax audits
- FTB audits
- Income tax audits
- Industry-specific tax audits (auto sales, dentistry, real estate, veterinary)
- IRS audits (correspondence, office, field)
- Payroll and employment tax audits
- Sales tax audits
- Worker classification audits
How Do You Appeal the Results of a California or Federal Tax Audit?
You must follow specific and time-sensitive procedures in order to have a chance at appealing the results of your audit successfully. The timeline and criteria involved in filing your appeal are dependent upon which agency conducted the audit and when. For example, if you are appealing an IRS tax audit, you must submit your materials within 30 days of the date indicated on Letter 525 (also called the “30-day letter”).
These “materials” are known as the “letter of protest” or “protest letter.” The purpose of the protest letter is to notify the IRS of your situation and request appeals, while setting forth the details of your argument. Thus, your letter of protest must contain specific elements, including but not limited to the following:
- A copy of the letter you received with the results of the audit (such as a proposal to assess additional tax)
- The tax year(s) involved
- The specific items you disagree with – and why
- Facts, laws, statutes, and other evidence to support your position
- Your signature and up-to-date contact information
Once your written protest has been reviewed, your case may be referred to the IRS Office of Appeals for further assessment, depending on the contents of your letter. Thus, it is imperative to have an experienced tax attorney help you draft the strongest letter possible, increasing your chances of having the opportunity to appeal.
There is a similar process for initiating the appeals process with the California Office of Tax Appeals (OTA), which uses the term “opening brief” instead of “protest letter.” You may request a hearing the OTA once you have received an Appeals Bureau Decision or Notice of Action from the CDTFA or FTB. Again, this must be completed within 30 days of the date printed on your letter.
Filing a Lawsuit in U.S. Tax Court
Appeals is not necessarily the end of the line for every tax dispute. Indeed, there are many types of audit-related tax controversies which often prove too complex to be resolved through appeals, notably those arising from corporate tax audits, substantial delinquent tax debts, and conduct that appears to be willful or fraudulent in nature (e.g. tax evasion).
In such cases, it may be in the taxpayer’s best interests to litigate the case in U.S. Tax Court, though each situation must be individually assessed to determine an appropriate course of legal action. Depending on the details, it may be more pragmatic to take a different approach from filing and litigating an action in court. It is crucial to plan carefully from the outset of the case, enabling a more effective and strategic approach to the mitigation of any financial damage you may be at risk of sustaining.
San Francisco, CA Tax Law Offices
Whether you need assistance appealing the results of your state or federal tax audit, or you require an aggressive tax litigation attorney to fight on your behalf in U.S. Tax Court, our San Francisco audit appeals and litigation lawyers are prepared to deliver the sophisticated representation your case demands. With over 20 years of experience practicing tax law in California – including more than 10 years of experience as a former public auditor – our award-winning tax attorneys, led by David W. Klasing, have the skill and knowledge to help taxpayers resolve even the most challenging of tax controversies.
There are three easy ways to request a reduced-rate initial consultation concerning a tax dispute in San Francisco. Contact the Tax Law Office of David W. Klasing online or call our tax offices at (415) 287-6568 or (800) 681-1295.
