San Francisco Tax Attorney + Accountant for Aerospace Companies
California’s aerospace industry has a rich history that dates back to the early decades of the twentieth century, when innovators like Jack Northrop and Howard Hughes were pushing the limits of what could be accomplished through aviation and engineering. Today, almost a century later, some of the world’s largest and most prestigious aerospace companies continue to be headquartered or do business in California, including Boeing, Lockheed, and Northrop Grumman. However, while California’s innovative business climate is attractive to many aerospace entities, its tax climate is a different story. Combined with federal tax regulations – which the IRS enforces aggressively – an eventual tax audit of your business is almost certain.
Protect your small, midsize, or large business by obtaining the services of a skilled and experienced aerospace tax audit defense attorney, like those at the Tax Law Office of David W. Klasing. Serving the Bay Area, our San Francisco tax lawyers and accountants combine decades of experience representing aerospace companies against federal and state tax agencies. Depending on your needs, our tax firm can provide California or IRS audit representation, audit appeals representation, or criminal tax defense representation. We work strategically to limit your risk of civil assessments of tax, penalties and interest and mitigate any risk of criminal tax prosecution. Contact us online to set up a reduced rate consultation or call our San Francisco tax office at (415) 287-6568 for assistance.
What Types of Issues Does the IRS Look for in Aerospace Industry Tax Audits?
The IRS website provides business owners with dozens of industry-specific guides describing IRS audit techniques and procedures. These guides, though designed for auditors, are an invaluable source of information for taxpayers as well. Aerospace professionals should refer to the IRS Aerospace Industry Research Credit Audit Technique Guide, the most current edition of which is the 2005 version, available here. (To review another version of the guide, follow this IRS link.)
The guide indicates several “trouble spots” and tax regulations that auditors should watch closely when examining an aerospace company, notably the use of research credits under 26 U.S. Code § 41, and the treatment of “research or experimental expenditures” under 26 U.S. Code § 174.
Taxpayers should be prepared for the IRS to examine any and all aspects of their company’s finances and records. During an IRS audit, the revenue agent conducting the examination may ask you questions that involve:
- The types of contracts you used (e.g. fixed price versus cost-plus)
- Contracting activities and various stages of contracting (e.g. Request for Proposal, Bid & Proposal)
- Various development activities (e.g. the design phase, development testing)
- How your research is funded
- Your treatment and handling of prototypes
- Issues involving gross receipts
After discovery of fraud at an aerospace company, such as the Omni aerospace fraud, the IRS may change strategies and shift from a civil tax audit to a criminal IRS investigation – which could lead to prison time. It is vital to call upon a criminal tax defense attorney for legal support, rather than your original accountant or tax preparer, due to potential concerns surrounding confidentiality and self-incrimination.
California + IRS Tax Audit Defense Attorneys for Aerospace Firms
Our San Francisco tax audit attorneys represent aerospace engineers and researchers, in addition to companies or startups that design or manufacture:
- Aircraft engines
- Avionics instruments
- Radar systems
- Satellite systems
Types of audits we handle include, but are not limited to:
Audit Appeals Representation for Aerospace Engineers
You may find that you disagree with the results of an IRS audit, CDTFA audit, or FTB audit. If so, you may dispute such results by filing an appeal. Tax appeals are heard by the IRS Independent Office of Appeals or the California Office of Tax Appeals (OTA), which, since its creation in 2017, has assumed most of the Board of Equalization’s former duties with regard to taxpayer disputes.
To file an appeal, you must provide the appropriate tax agency with a detailed, point-by-point breakdown of its errors and your counterpoints, which must be supported by factual evidence. If you fail to dispute a specific point, it will be treated as though accepted by the taxpayer. Because state and federal appeals procedures are rigorous and technically demanding, taxpayers should never challenge the IRS, FTB, or CDTFA without first obtaining counsel from an experienced audit appeals attorney in San Francisco.
San Francisco Tax Lawyer + Accountant for Aerospace Companies
If you or your business has been chosen for a tax audit in California, it is imperative that you begin preparing right away. Your actions today determine the penalties you could face in the future. Speak to a trusted, effective tax lawyer for aerospace companies in the Bay Area, like David W. Klasing. Contact the Tax Law Office of David W. Klasing online to arrange a reduced rate initial consultation or call our San Francisco tax office at (415) 287-6568 for immediate assistance.
Note: If you have concerns about the privacy of our initial or subsequent communication and are unable to easily travel to our Irvine / Orange County Main Office, consider scheduling a GoToMeeting to safely and securely establish an initial or maintain an existing attorney client relationship. With end-to-end encryption, strong passwords and top-rated reliability, no one is messing with your meeting. To schedule a reduced rate initial consultation via GoToMeeting follow this link. Call our office and request a GoToMeeting if you are an existing client. We are generally happy to travel to any of our appointment only satellite offices for a subsequent meeting in appropriate circumstances once a relationship is established via a signed engagement letter and the payment of an initial retainer or where enough retainer is available where a current client to cover the reasonable travel time and time required for the meeting.
Will it cost me more to hire the Tax Law Offices of David W. Klasing, who’s main office and the vast majority of the firm’s staff is located in Irvine California, but an appointment only Satellite office is close to my location, as opposed to a local company? Absolutely not! See our policies that address this issue here.