San Jose, CA Tax Audit Attorney + CPA
All federal or California tax audits pose serious hazards to any taxpayer or business owner. The auditor may conclude that you or your business owes additional tax, unpaid interest, costly tax penalties – or all three. Still more concerning is the potential for an IRS, FTB, CDTFA, EDD tax audit to uncover taxpayer actions that can result in misdemeanor or felony criminal tax charge exposure, giving rise to a criminal tax investigation.
If you or your business has been selected for a state or federal tax audit, take proactive steps to defend yourself by consulting with the award-winning tax audit defense lawyers and CPAs at the Tax Law Office of David W. Klasing. We have over 25 years of experience representing taxpayers in state and federal audit proceedings, including eggshell audits, reverse eggshell audits, and California and IRS audit appeals. To arrange a reduced-rate consultation regarding a California or IRS tax audit, contact us online, or call the Tax Law Office of David W. Klasing at (805) 617-4566 today. Note: All appointments in our San Jose office are by appointment only.
See our Audit Representation Q and A Library
Federal IRS Audits vs. California State Tax Audits
There are both similarities across, and differences between, state and federal tax audits. The fundamental purpose of every tax audit is to identify and resolve noncompliance with tax regulations, a process which involves reviewing taxpayer records and, where appropriate, assessing additional tax, interest, and/or penalties. Another similarity is that both state and federal audits can be disputed, or appealed, by the taxpayer, as discussed in greater detail below.
Moreover, both IRS and California tax audits have the potential to spur criminal tax investigations if willful noncompliance seems to have occurred. For example, if an auditor finds cause to believe that a taxpayer intentionally underreported his or her income to avoid paying state or federal taxes, the matter can be referred to criminal investigators – which may result in charges being filed. If this occurs, or is at risk of occurring, it is vital for the taxpayer to seek out a criminal tax defense attorney immediately.
The most obvious difference between state and federal examinations is the government agency conducting the audit. Federal tax audits are conducted by the Internal Revenue Service (IRS), while state audits are conducted by California government agencies such as the Franchise Tax Board (FTB), Employment Development Department (EDD), or California Department of Tax and Fee Administration (CDTFA). Each of these agencies has a different regulatory focus. For example, California income tax audits are generally conducted by the FTB, whereas sales tax audits of brick-and-mortar or internet businesses are handled by the CDTFA. California payroll and employment tax audits are generally performed by the EDD, such as worker classification audits. However, state and federal agencies share information with each other, which means that a state tax audit can give rise to an IRS audit, or vice versa.
See our Sales Tax Q and A library
See our Employment Tax Law Q and A Library
One more vital difference between state and federal audits is the pertinent statute of limitations. The IRS statute of limitations is, at minimum, three years. This means the IRS has three years – or more, depending on the situation – to audit a tax return, either from its original due date or date of filing. However, state tax regulations differ on this point, giving California auditors four years: an extra 12 months. Both IRS and California tax audits can be conducted indefinitely if the case involves (1) non-filer issues or (2) tax fraud.
Can You Appeal a California or Federal Tax Audit?
The short answer to this question is yes – subject to certain conditions. Provided you meet appropriate standards and criteria, which we will discuss momentarily, you may be eligible to appeal the results of your California or IRS audit. Put simply, an appeal is a method for resolving a disagreement between the government and the taxpayer about what the latter owes. If the taxpayer’s appeal is successful, the result may be a substantially lower tax bill.
Before you can request an appeal, you must meet certain criteria, as noted above. For example, you may not file an appeal with the California Office of Tax Appeals (OTA) until you have received either a Notice of Action or Appeals Bureau Decision from the FTB or CDTFA. It is also crucial to adhere to filing deadlines, which will be provided in the following documents:
- Federal Audits – Refer to the date on your “30-day letter”
- California Audits – Refer to the date on your Appeals Bureau Decision or Notice of Action
Even if your request for an appeal is granted, you must continue to approach the process methodically and strategically in order to prevail. It is particularly vital to submit a strong “written protest” (for IRS appeals) or “opening brief” (for OTA appeals). Though the terminology is different, the requirements are similar: the OTA and IRS both require taxpayers to submit a written protest or opening brief that provides the taxpayer’s contact information, summarizes the items in dispute, and supports the taxpayer’s reasoning with factual information, such as relevant statutes or court decisions. If the taxpayer can successfully prove that the auditor made an error, the disputed penalties, interest charges, and tax liabilities will be reduced.
See our IRS Appeals Q and A Library
See our Tax Litigation Q and A Library
IRS, FTB, EDD, and CDTFA Tax Audit Lawyers Serving San Jose, CA
If you have been selected for an IRS, EDD, CDTFA, or FTB tax audit, the time to begin preparing your defense strategy is now. It is crucial to work with an experienced tax audit attorney, which not only ensures that your legal rights will be upheld and protected, but moreover, minimizes the risk of accidental self-incrimination.
An attorney can explain tax terminology and legal procedures throughout each stage of the audit, making the process clearer and easier. In addition, your attorney can also negotiate to reduce what you might owe. By providing in-depth tax guidance and acting as your legal representative, an attorney gives you a better likelihood of emerging from your audit with minimal damage. To speak with an audit lawyer today, call the Tax Law Office of David W. Klasing in San Jose at (805) 617-4566, or contact us online to schedule a reduced-rate appointment. Please note that all meetings at our San Jose tax office must be scheduled in advance.
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: