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    Tax Law Offices of David W.


    7 W Figueroa St #300,

    Santa Barbara, CA 93101


    The Santa Barbara Tax Attorneys, CPA and EAs at The Tax Law Offices of David W. Klasing routinely and effectively represent taxpayers throughout Southern California. We will fight the IRS on your behalf, defend you against audits, and help you plan proactive tax strategies to legally reduce your ongoing tax burden. For a reduced-rate initial consultation, contact our office today at 805-200-4053 or 800-681-1295 our reach out to us online. Our Santa Barbara office is located in Downtown Santa Barbara just off State Street.


    If you were contacted by the IRS or a California taxing authority, and informed that you will be facing an audit, there is no need to panic. Audits arise for a multitude of reasons and may not always mean that you are in trouble. However, it does mean the IRS or California Taxing Authority such as the California Franchise Tax Board, FTB, California Department of Tax and Fee Administration, CDTFA (BOE), California Office of Administrative Hearings, OAH, California Employment Development Department, EDD, will be asking for information, demanding documentation, and reviewing your records and tax filings with incredible scrutiny. To defend against these determinations or potential findings, it is vital to have the Tax Attorneys, CPAs, and EAs of the Tax Law Offices of David W. Klasing on your side during your Federal or California tax audit.

    Our dual-licensed Santa Barbara Tax Audit Attorneys and CPAs excel in addressing complex tax dilemmas. Whether it’s assisting online vendors with California’s evolving sales tax regulations, or steadfastly supporting businesses during high-risk IRS audits, our strategic interventions aim to curtail your tax liabilities and safeguard you from potential civil or criminal tax repercussions. From meticulously managing amended tax returns to handling intricate IRS home, office, correspondence, eggshell or reverse egg shell tax audits, we always place your interests at the forefront, ensuring minimized risks and solutions tailored to your needs.

    In addition to having years of experience as a dually licensed Tax Lawyer and CPA in Santa Barbara, our founder and principal attorney, David W. Klasing, possesses decades of experience as former auditor in public accounting, and has represented client’s in federal (IRS) and California (FTB, CDTFA, EDD) audits for nearly 30 years, enabling our tax team to navigate the audit process with precision and skill. Types of federal and California tax audits in which we provide representation include:

    One of the Best Tax Audit Defense Lawyers and CPAs in Santa Barbara

    The Santa Barbara Tax Audit Defense Attorneys at The Tax Law Offices of David W. Klasing are ready willing and able to help you face the IRS or State of California in your audit. Whether your taxes are perfectly correct or contain egregious errors that could be viewed as purposeful income tax evasion, our Audit Defense Lawyers, CPAs and EAs are here to help. In a best-case scenario, our Firm may be able to help convince the IRS or California Taxing Authority that your taxes were correct as originally filed, and are prepared to fight their findings in court if they get either the facts or the law wrong, as they frequently do.

    Without the seasoned eyes of our dual-licensed Santa Barbara Tax Litigation Attorneys and CPAs at the Tax Law Offices of David W. Klasing, your high risk tax issues could snowball and result in serious civil and criminal tax consequences. We are dedicated to providing unparalleled representation in IRS and California state tax disputes. Our seasoned Attorneys and CPAs specialize in various services, including navigating sensitive (eggshell) audits, ensuring tax compliance, and advising on reporting positions. Our clients benefit from our strategic handling of disputes related to employment tax, estate and gift tax, cases involving unreported income, and actual and potential allegations of civil & criminal tax fraud. We meticulously assess litigation risks where latent criminal tax issues may exist to secure resolutions as soon as possible, drawing upon our deep understanding of the procedural rules and substantive issues at play. To date, we have never lost in tax court. We won’t take your case if we don’t believe we’ll win. The IRS’s 98% settlement rate is why we’ve never stepped foot in tax court, sparing our clients the most expensive part of tax litigation.

    Our skilled tax litigation & appeals lawyers & supporting CPAs have extensive knowledge and experience dealing with various federal and California state tax audit issues. This incorporates representing clients in disputes involving IRS audits, disputes with the CDTFA, BOE, and FTB, claims for refund, tax collection defense, innocent spouse relief, criminal tax defense, and more. Whether it’s handling cases of criminal tax exposure, guiding you through a civil tax audit, eggshell audit, reverse eggshell audit, or defending against a criminal tax investigation, the expertise of our seasoned dual-licensed Santa Barbara Tax Litigation Attorney and CPA is invaluable. As an experienced litigator, David W. Klasing can represent you in the Federal or California Tax Court. Call 805-200-4053 or schedule a reduced-rate initial consultation here at our Santa Barbara office or one of our other convenient locations across Southern California. Our services include representing clients in the following scenarios:

    Calculating Money

    Facing a Tax Audit in Santa Barbara

    If you are facing a Federal or California state tax audit, it does not have to be the end of the world. An audit does not automatically mean that you are currently in trouble with the IRS, FTB, CDTFA (BOE), or EDD or that you could wind up facing criminal tax charges. Audits can occur on a random basis under the IRS’s national research program, or may be triggered by as statistical analysis of the deductions or credits that place your taxes outside the statistically proper norms. An audit could also be triggered if your business partners, company, or investors are facing audits or investigations for tax crimes or other serious tax issues – but that does not automatically mean that you, personally, did anything illegal. But after over 2 decades of audit and criminal tax investigation representation experience, it is very rare, in our opinion, that the IRS, FTB, CDTFA (BOE), or EDD is completely satisfied that your original taxes were filed correctly. Moreover, it is very rare where a Federal or California tax audit ends without the assessment of additional tax, penalties and interest, at a minimum, therefore it behooves you to protect yourself. If the IRS, FTB, CDTFA (BOE), or EDD finds serious inconsistencies, failures to file, improperly excluded taxable income, or other violations of the Tax Code, they may assess additional tax, penalties and interest at best, or, at worst, refer your case to their criminal division.

    If you have failed to file tax returns, have underreported your income, or have taken other actions that could constitute tax evasion, our dual-licensed Santa Barbara Tax Fraud Attorneys and CPAs can defend you in court, negotiate with the IRS, protect your constitutional rights, mitigate your penalties, and bring you back into compliance with the Internal Revenue Code. Contact the Tax Law Office of David W. Klasing online immediately to arrange a reduced-rate initial consultation or call our Santa Barbara tax office at 805-200-4053 for help today.

    The U.S. is unique in its citizenship-based taxation that imposes stringent tax reporting and disclosure laws, especially for those holding foreign assets. Non-compliance, failing to file or pay taxes, can result in hefty penalties, with a 5% charge on the outstanding tax bill for each month of delay beyond the original tax filing deadline up to a maximum of 25%. Moreover, undisclosed foreign accounts, once considered safe havens, now carry substantial risks due to regulations like FATCA and the Bank Secrecy Act’s FBAR. At the Tax Law Offices of David W. Klasing, our dual-licensed Santa Barbara Unfiled Tax Return Attorneys and CPAs stand ready to guide you through these complexities. Whether you’re confronting the repercussions of unfiled tax returns or navigating foreign account disclosures, our expertise ensures compliance and the protection/mitigation of potential civil or criminal tax consequences.

    Defending Against an IRS, FTB, CDTFA (BOE), or EDD Audit or Criminal Tax Investigation

    Even if a Federal or California audit or investigation turns up incriminating evidence against you, there is still a chance to defend yourself – or better yet, hire a Tax Audit or Criminal Defense Tax Attorney to defend you. The taxing authority’s determination that your taxes were improperly filed and related assessment of additional tax, penalties and interest is not automatically correct. Neither is any assertion that you committed a tax crime. The taxing authorities often misinterpreted the law or facts and overlook / discount evidence that would mitigate or reduce their assessment, or even prove that your original tax filings were correct or that you have not committed a tax crime. Our team of Tax Attorneys, CPAs and EAs are ready willing and able to appeal or litigate your case, either to mediation or to Tax Court or to California’s Office of Tax Appeals. We also have extensive experience and success in defending Federal and California criminal tax investigations.

    At the end of an audit or investigation, the IRS, FTB, CDTFA (BOE), or EDD will either determine that your taxes were correct and there is no adjustment necessary, or that something was wrong, and you need to pay additional taxes, penalties and interest and a determination that a tax crime was committed is possible. If the taxing authority does discover errors and or suspects acts of evasion, our Tax AttorneysCPAs and EAs may be able to work with the taxing authority to come to an agreement that avoids criminal charges, corrects the errors, and sets you down a better path for future taxation. If the taxing authority is unable to agree to a beneficial plan, our Firm will shepherd your case through the appeals, litigation, or prosecution process, and attempt to overturn the taxing authorities’ assessment and vindicate you of the intentional or non-intentional “errors” they assert exist in your taxes.

    As noted above, it may be possible to appeal the results of an IRS tax audit if you disagree with the initial conclusions of the audit. The IRS will consider appeals based on factual or legal disputes, though any disputes “based on moral, religious, political, constitutional, conscientious, or similar grounds” will be summarily rejected.

    To appeal an IRS tax audit, you must write a “protest letter” or draft a tax court petition outlining the nature of, and basis for, your dispute, including relevant facts and laws to strengthen and support your position. This letter should be sent to the address featured on the letter explaining your appeal rights – not to the actual Office of Appeals, which may result in significant delays. It is in your best interests to be represented by a knowledgeable and effective IRS Tax Appeal Lawyer serving Santa Barbara, which will increase your likelihood of achieving a favorable outcome.

    Our dual-licensed Santa Barbara Appeals Attorneys and CPAs provide skilled representation before an appeals officer. An essential element of having a successful outcome in the appeals process is to have detailed and organized records. Utilizing our extensive training and experience, we make sure your documents are in order and that you are in the best position to prevail at the appeals stage. Dealing with the IRS’s Office of Appeals can seem daunting, but we bring strategic insight and a very long track record of success to the process. Whether you’re dealing with an IRS or California state tax audit, challenging a tax assessment, or seeking relief from IRS collection actions, our meticulous approach ensures you’re well-prepared for every step of the appeals process. From handling trust fund recovery penalties to disallowed business expenses, we will ardently fight for you, keeping you informed throughout the process.

    Recently, the CDTFA issued updated guidance on protocols and procedures for disputing, or “appealing,” CDTFA determinations. Though the CDTFA makes efforts to provide clear instructions for taxpayers, it is not recommended to attempt handling an appeal without professional tax representation. It is in your best interests to consult our experienced CDTFA Audit Attorneys before filing an appeal or petition for redetermination due to the legal and financial complexity involved. We can help you appeal IRS and California state tax audit decisions involving:

    1040 Tax Form

    What Should I Do if I am Being Audited or Criminally Investigated for a Tax Crime?

    The first step after receiving notice that you are being audited or criminally investigated for tax crimes by a Federal or California tax authority, should be to contact an IRS Audit and Criminal Tax Defense Attorney. The Tax Lawyers, CPAs and EAs at The Tax Law Offices of David W. Klasing are ready willing and able to fight to protect your constitutional rights and help mitigate the assessment of additional tax, civil and criminal penalties and interest.

    The next step should be to confirm that the audit or criminal tax investigation is legitimate. There are thousands of scams where individuals pretend to be IRS employees in an attempt to dupe taxpayers into paying them money. These sorts of scams are unacceptable, and our Firm can help you verify the legitimacy of any alleged audits or criminal tax investigations against you.

    After contacting a Tax Attorney, you should begin gathering all of the economic records you can. Audits may not apply for the most recent tax season, but could reach back up to six years. The typical audit deals with the taxes from two to three years ago, and may come well after filing. Collecting your tax records, investment records, pay stubs, other economic records and accounting records, back this far may be a complex task, but may ultimately help protect you from the negative outcomes of an audit or criminal tax investigation.

    When facing tax audits from agencies like the IRS, CDTFA, EDD, or FTB, certain red flags, such as destroyed records, underreported income, or unfiled returns, can intensify the examination, leading to high-risk eggshell and reverse eggshell tax audits. As such, residents and businesses must be aware of potential criminal tax violations and the signs indicating that they might be under a more rigorous investigation by the IRS’s Criminal Investigation Division (CID). This is especially so when the taxpayer has a history of blatantly cheating on their federal tax returns and is now under audit and thus fears criminal tax prosecution. Even international tax evasion schemes that utilize remote tax havens are easily detected by the IRS, which works with tax and law enforcement agencies around the globe and throughout the United States.

    At the Tax Law Offices of David W. Klasing, we understand the gravity of potential tax charges stemming from intentional tax evasionfraudulent withholding, or false statements and the associated heavy fines and prison sentences. Skilled legal representation can make all the difference between an IRS audit concluding uneventfully – or spiraling into a dangerous criminal tax investigation. If you or your small business has been selected for a tax audit in Santa Barbara, and you are concerned about a criminal tax investigation resulting from or occurring alongside the audit, engaging our Santa Barbara Dual Licensed Criminal Defense Attorneys & CPAs services at the onset of a high-risk audit / criminal tax investigation will maximize the possibility of a favorable outcome without escalating to criminal tax charges. We are here to provide aggressive, informed representation in areas including:

    International Taxation Attorneys, CPA and EAs in California

    The United States is one of the only countries in the world to impose taxes based on citizenship instead of residency. Under this system of “citizenship-based” taxation, many taxpayers are subject to tax laws of which they are unaware. Examples of taxpayers who may be impacted by international tax law issues include:

    • Recent immigrants or frequent business travelers who have income generating assets and bank accounts in other countries
    • Taxpayers who have dual citizenship with the United States
    • Taxpayers who have recently sent money to the U.S. via wire transfer
    • S. expats who live and/or work abroad

    Taxpayers who belong in these categories are, for example, generally subject to the Bank Secrecy Act (BSA), which requires U.S. citizens and companies to report foreign income and foreign information to the IRS. This foreign information is typically reported by filing FinCEN Form 114 (otherwise known as the Foreign Bank Account Report, or “FBAR”), filing Form 8938 (Statement of Specified Foreign Financial Assets) under the Foreign Account Tax Compliance Act (FATCA), and meeting a multitude of other requirements for international taxpayers. Failure to report global income and omitting foreign information reporting can lead to civil or even criminal penalties, depending on whether such failure was “willful” or constituted tax fraud.

    Our Santa Barbara FinCEN Form 114 Attorneys, CPAs and EAs specialize in guiding taxpayers through the intricacies of FinCEN Form 114, a mandatory IRS form for reporting offshore bank accounts. Our award-winning team, with a long track record or excellence in international tax representation, ensures compliance, safeguards your legal rights, and strategizes to minimize IRS tax penalties. Navigating the intricacies of the Corporate Transparency Act (CTA) and FinCEN’s new filing requirements can be daunting for businesses. Contact our Santa Barbara office at (800) 681-1295 or contact us here online for assistance on the following:

    If you’re engaged in international business or managing foreign assets, navigating the complex landscape of global taxation is crucial to success. At the Tax Law Offices of David W. Klasing in Santa Barbara, our team of dual-licensed International Santa Barbara Tax Attorneys, CPAs & EAs is poised to protect your interests. Addressing compliance oversights is essential, with the IRS escalating its efforts to uncover unreported global investment income, offshore businesses, and financial accounts. Now is the time to enlist experienced legal counsel to review your international tax filing history, ensuring compliance that minimizes additional tax and penalties and avoids criminal tax prosecution. Whether you’re an American expatriate or have multiple offshore business entities and investments, we provide meticulous attention to ensure your international tax dealings are reported with precision and foresight. Our association with Marc Schwartz, a dually licensed International Tax Attorney and CPA, greatly enhances our ability to address the often complex federal offshore tax planning, compliance, and controversial implications surrounding engaging in international business and the associated mandatory information reporting.

    Get Back into Tax Compliance without Facing Criminal Tax Prosecution In Santa Barbara

    Our dual-licensed Santa Barbara Voluntary Disclosure Attorneys and CPAs offer experienced guidance through the IRS Voluntary Disclosure Practice (VDP). This program is crucial for individuals in Santa Barbara who have willfully understated their Federal tax liabilities. It provides a systematic and secure avenue to rectify their tax status while avoiding criminal tax prosecution. Similarly, the State of California’s Franchise Tax Board (FTB) and the California Department of Tax and Fee Administration (CDTFA) provide methods for non-compliant taxpayers in Santa Barbara to regain compliant status by coming forward with the details of their failure to comply with the California state tax code. The path to voluntary disclosure to the FTB depends on whether you are an in-state or out-of-state filer. We are dedicated to assisting in making sincere, comprehensive, and timely disclosures to the IRS and California state tax authorities, which includes arranging for the payment of owed taxes, interest, and penalties and cooperating with the tax agencies to determine the correct tax liability.

    In response to recent changes, the new Department of Justice Tax Division’s Voluntary Disclosure Policy encourages entities, including partnerships, government entities, and unincorporated associations in Santa Barbara, to make voluntary disclosures to the Tax Division, even if they believe the government may already be aware of the misconduct.

    Our dual-licensed Santa Barbara Voluntary Disclosure Attorneys and CPAs skillfully navigate the complexities of various federal and California state voluntary disclosures, including domestic, offshore, CDTFA, and FTB voluntary disclosures, streamlined procedures, and delinquent FBAR and international information return submission procedures. As long as a taxpayer in Santa Barbara who has willfully committed tax avoidance (potentially including non-filed foreign information returns coupled with affirmative evasion of U.S. income tax on offshore income) self-reports the federal tax non-compliance through a domestic or offshore voluntary disclosure before the IRS has started an audit or criminal tax investigation/prosecution, the taxpayer can ordinarily be successfully brought back into tax compliance and receive a nearly guaranteed pass on criminal tax prosecution and simultaneously often receive a break on the civil penalties that would otherwise apply. We deal with:

    Santa Barbara Tax Evasion Defense Attorneys for Individuals and Corporations

    If you, your husband or wife, or your business has been accused of engaging in tax evasion, especially if this took place in open divorce court, an informant or a whistleblower is involved, it is absolutely imperative that you consult with an experienced tax evasion attorney for legal help immediately. Unlike a Certified Public Accountant (CPA), who is primarily equipped to handle financial tax planning and compliance, an attorney or dually certified attorney-CPA is well-versed not only in California state and federal tax laws, but also in court procedures, legal precedents, and criminal tax defense including the use of protections against unreasonable searches and self-incrimination available under federal constitutional law. This enables a stronger, more rigorous defense, improving the odds of a case dismissal, significant civil and criminal penalty reductions, or other favorable outcomes. Additionally, a tax lawyer provides the advantage of the attorney-client privilege, which can be instrumental in defending and building a criminal tax defense or when negotiating with the IRS. Don’t let the tax professional that you turn to for help be forced to turn witness against you. Only discuss criminal tax issues with a criminal tax defense attorney. Also, be aware that you have a conflict of interest with the original preparer of the return at issue. Throwing you under the bus will protect their reputation while putting you at extreme risk of criminal tax prosecution.

    The Santa Barbara Tax Evasion Defense Attorneys at the Tax Law Office of David W. Klasing have experience handling most types of potential misdemeanor and felony tax evasion charges, including federal income tax evasion, state income tax evasion, employment tax evasion, sales tax evasion, corporate tax evasion, cryptocurrency and Bitcoin tax evasionoffshore tax evasion, and divorce tax evasion. We can also provide assistance with related tax matters, such as unfiled or delinquent tax returns, undisclosed foreign accounts and related foreign taxable income, and tax preparer liability. For a reduced-rate initial consultation, call our tax offices immediately at (805) 200-4053 or (800) 681-1295, or contact the Tax Law Office of David W. Klasing online.

    Struggling with Cryptocurrency Taxation in Santa Barbara?

    In the rapidly evolving world of virtual currencies like Bitcoin and other digital assets, many investors and traders are navigating complex Federal and California state tax implications. Receiving a letter from the IRS about unreported cryptocurrency transactions discovered via John Doe Summons can be alarming. It may lead to a high-risk eggshell audit or even a covert criminal tax investigation if not addressed appropriately. The surprise is often considerable when individuals learn that exchanges of one type of crypto for another are taxable events in the year they occur, even with no fiat currency changing hands, or that the IRS might have obtained their transaction details from sources like Coinbase. The volatile nature of the crypto market, with its significant highs in 2017 followed by subsequent lows, has left many facing substantial tax liabilities, often disproportionate to their current portfolio value.

    Our Santa Barbara Bitcoin and Virtual Currency Tax Attorney & CPA have extensive experience in all facets of cryptocurrency, from understanding the nuances of airdrops to addressing challenges faced by individuals whose crypto was held with a brokerage that has since folded. The exposure is even more significant for those who’ve ventured offshore with cryptocurrency. However, there’s a silver lining: taxpayers who’ve intentionally committed tax evasion can often self-report through voluntary disclosure, potentially avoiding criminal tax prosecution and benefiting from reduced civil tax penalties.

    Whether you’re dealing with Bitcoin, Ethereum, Litecoin, or any other virtual currency, call us today at 949-681-3502 or schedule a reduced-rate initial consultation here, and we will successfully guide you through the record-keeping and reporting procedures required to file a tax return. We will also fight vigorously for those whom the IRS has accused of failure to report and help them stave off more severe civil and criminal tax penalties. Read our story “Tax Fraud is Going Virtual” to know more about virtual tax evasion. For more information, see the following:

    In Need of Tax & Estate Planning in Santa Barbara

    Our dual-licensed Estate Planning Tax Attorneys and CPAs represent estate planning clients throughout the globe with convenient offices in Santa Barbara, the surrounding California counties. Our custom estate planning representation ensures that your final wishes are honored and helps you provide for your loved ones in your absence. Combining our financial planning, legal, tax, and accounting skills, and knowledge, we are committed to helping you preserve your wealth for future generations. Estate planning is a necessary process that a knowledgeable lawyer can compassionately and effectively handle. Our services include creating tax-efficient estate plans that reflect your goals, assisting with preparing and filing estate tax returns, and offering expert advice on gift tax implications.

    Estate planning involves multiple components, which need to be customized depending on the unique set of facts and circumstances underlying your financial situation, such as the size of your estate, the number of heirs involved, and the complexity and location of your domestic and international assets, including whether foreign or offshore bank accounts are involved. Our skilled California Estate Planning attorneys and supporting staff of CPAs and CPA candidates have decades of experience assisting clients with wills, trusts, advanced healthcare directives, and other estate planning and administration matters. We assist in:

    Confused About California State Sales Tax Rules in Santa Barbara?

    In Santa Barbara, businesses that collect sales tax from their customers are entrusted with remitting those taxes back to the California Department of Tax and Fee Administration (CDTFA), (formerly known as the State Board of Equalization (BOE)). Any discrepancies, such as failing to pay collected taxes or having revenue that’s not appropriately taxed, can trigger a California sales tax audit by the CDTFA. Given the significance of sales tax, which accounts for over 80% of the Department of Tax & Fee Administration (CDTFA) revenue collection, California state tax audits are common, especially for businesses in certain high-risk industries. If you find your business selected for a tax audit, it would be wise to remain composed and promptly contact our dual-licensed Santa Barbara Sales Tax Attorneys & CPAs.

    With recent overhauls in sales tax laws, especially after the U.S. Supreme Court’s in Wayfair granting states more power to enforce compliance over online sellers, it would be wise to have our dual-licensed Santa Barbara, CA Internet Sales Tax Attorney + CPA by your side. From internet sales tax audit representation to small business tax planning and bookkeeping services, we possess the experience to answer your business tax questions and help you achieve your goals. Our expertise spans from understanding the sales tax nexus and differentiating between sales and use tax to assisting with the complexities introduced by internet sales. Trust our Santa Barbara Sales Tax Audit Attorneys to provide comprehensive sales tax advisory and representation, ensuring your business thrives in Santa Barbara’s complex regulatory environment.

    The Santa Barbara Tax Law Attorneys, CPAs and EAs at The Tax Law Offices of David W. Klasing are ready, willing and able to help you defend against an IRS, FTB, CDTFA (BOE) (BOE), or EDD audit or criminal tax investigation. Our experienced staff will review your case, communicate with the auditing / investigating taxing authority on your behalf, and fight to get the best result possible. If the results achieved are less than optimal, our Tax Appeals and Criminal Tax Defense Lawyers will fight to better the situation in the appeals and litigation process or where necessary, strive to get a declination prior to criminal indictment, or worst-case scenario, try to achieve damage control through an advantageous plea bargain. To schedule a reduced-rate initial consultation regarding your audit or criminal tax investigation / prosecution, call 805-200-4053 or 800-681-1295 or schedule online today. Our Santa Barbara Tax Law Office is conveniently located in Downtown Santa Barbara, just off State Street.

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    IRS Audit Representation

    The IRS handles any audits related to federal income tax returns, whether they are business or personal returns. These audits can be triggered randomly or but ordinarily are triggered by suspicious activity that makes the IRS believe you are underreporting income, underpaying taxes, or claiming exemptions or credits that do not actually apply to you. These audits typically look back over 3 years of your records, but in some cases the IRS will be permitted to look back over 6 years or more of your records.

    3 Types of Audits by the IRS

    There are three major types of audits by the IRS: a correspondence audit, an office audit, and a field audit. Different types of audits vary in level of thoroughness, implication of punishment, and expected time of completion, so it is important that you and your dual licensed Santa Barbara Tax Attorney & CPA identify which one you are facing. Having a Tax Lawyer & CPA on your side to assist with audit compliance can also greatly reduce the chance of a simple mistake, which may result in a longer time frame or a ramping up of the audit’s severity.

    Correspondence Audit

    Correspondence audits, also referred to as mail audits, are the action with the lowest level of scrutiny. A correspondence audit begins when you receive a letter from an IRS agent asking for records and documents to back up information on your tax returns. The entire audit will be conducted through correspondence by mail or electronically. Taxpayers should typically expect a correspondence audit to be resolved within three to six months of their initial response, barring any mistakes on the taxpayer’s end or discovery of any issues that warrant further examination. Our Tax Lawyers and CPAs can help you gather and reconstruct the necessary documents and correct any errors you may have made.

    Office Audit

    An office audit involves you bringing the requested documents and records into an IRS office where the agent will review them and interview you in real time. You will receive correspondence from the IRS setting the date and location of your office audit. Typically, you will be called to the closest available IRS field office. Similar to mail audits, office audits usually wrap up between three to six months from the date of your meeting. You should always have a dual licensed Tax Attorney & CPA accompany you to this meeting as well as prep you for the meeting. If you wish to avoid the meeting entirely or cannot make the meeting on the date in question, your Tax Attorney & CPA may be able to represent you in your stead at the office audit.

    Field Audit

    The most serious type of audit conducted by the IRS is a field audit. In a field audit, the agent will often wish to come to your home or place of business and look through your records and interview you in person. Field audits are usually reserved for serious cases where civil or criminal tax penalties may be considered or where multiple complex streams of income warrant particular attention. These audits may take many months or even years to resolve. Thus, you should engage the services of a dual licensed Tax Attorney & CPA as soon as you learn a field audit is going to occur.

    California Franchise Tax Board (FTB) Audit Representation

    Audits related to your California income tax returns are conducted by the California Franchise Tax Board (FTB). Even if a federal audit found that you did not owe any money to the IRS, you may still owe money to the FTB because of the differences in state and federal tax laws. FTB audits are ordinarily completely independent of any federal audit. The FTB conducts independent audits when they suspect underpayment which is occasionally related to California-specific issues, such as someone who lives in California but is not paying required residency taxes. An FTB audit can be just as serious as one conducted by the IRS and you should retain the services of a skilled Tax Attorney. An attorney can help you reconstruct records, challenge any incorrect findings by the FTB, and mitigate any damage by working out a payment plan with the FTB for any back taxes that you do owe.

    California Employment Development Department (EDD) Audit Representation

    IRS audits cover federal payroll taxes, but California payroll tax audits are conducted by an entity known as the California Employment Development Department (EDD). Every employer in California is required to withhold California payroll taxes out of each paycheck for their employees and to remit these taxes to the proper state agency. Failing to collect or remit such taxes can result not only in owing back taxes but also in serious potential civil or even criminal fines and penalties.

    One of the most common issues triggering an EDD audit is the suspected misclassification of those who work for you as independent contractors as opposed to employees. While employers are required to collect payroll taxes for employees, they are not required to do so for independent contractors who work for them. However, there are tight restrictions on who can and cannot be classified as an independent contractor. A skilled tax attorney can work the EDD to attempt to prove you have been classifying correctly, that any mistakes you made were unintentional, and to mitigate the damage from any and all payroll tax issues that arise in the course of the audit.

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

    The California Department of Tax and Fee Administration (CDTFA) conducts audits related to issues with the state sales tax. What sales tax businesses are required to charge can be complex and vary depending on the locality from which they operate and the type of product they sell. For online businesses, the location of the consumer-buyer can also be a factor. If you are suspected of undercharging sales taxes or failing to remit them properly, you could be subject to a very invasive audit.

    A tax attorney can help you prepare the numerous books and records you will need for such an audit, potentially including receipts and other records of every sale you made. If there was undercharging or underreporting, a lawyer can work to mitigate the potential civil or criminal fines and penalties. If you do not agree with the results of the audit, a lawyer will know how to timely file a petition challenging them so that you are not deemed to owe more than you do.

    How Do You Choose a Tax Lawyer or CPA in Santa Barbara?

    While many individuals or small businesses may seek a Tax Lawyer or CPA because of one specific concern, you should be aware of how easily a single tax issue can snowball into a larger deal that requires multiple angles of expertise. Even if you do not realize it, you may be facing multiple issues stemming from the same noncompliance. You may not even be aware of the noncompliance that is causing the issues.

    The solution you should seek should be legal counsel that has a multidisciplinary wide range of knowledge across all tax issues. This way, if a new issue pops up, you will already have someone familiar with your situation that is able to help you, rather than having to seek out another relationship with a relative unknown.

    It is also important that your Tax Lawyer & CPA operates near you. Firstly, for tax issues affecting Santa Barbara residents you will want advice from someone who is intimately familiar with the state code and regulations that apply to you so that you do not have to pay for the time that an unfamiliar lawyer spends learning about local tax law. Even if you are strictly dealing with federal tax issues, you will want a representative that you can meet with face-to-face and who can be at your place of business or accompany you to an office audit with ease. David Klasing is an instrument rated private pilot that owns a very fast yet economical airplane.  He can be in Santa Barbara within 1.5 hours of getting airborne.

    The dual-licensed Tax Attorneys and CPAs at the Tax Law Offices of David W. Klasing have years of experience dealing with every aspect of personal or business tax filings, returns, and record-keeping. We are also well-versed in tax defense advocacy and can represent you if you find yourself the target of an IRS, EDD, CDTFA or FTB audit, eggshell audit, reverse eggshell audit or a criminal tax investigation. We have offices throughout the State of California, so we are well-positioned to serve the needs of our Santa Barbara clients.

    Why Hire a Dual Licensed Santa Barbara Tax Attorney and CPA?

    Why Hire a Santa Barbara Dual Certified Tax Attorney & CPA, Reason #1



    Why Hire a Santa Barbara Dual Certified Tax Attorney & CPA, Reason #2

    Managing Liability


    Why Hire a Santa Barbara Dual Certified Tax Attorney & CPA, Reason #3

    Negotiation Skills


    Why Hire a Santa Barbara Dual Certified Tax Attorney & CPA, Reason #4

    Financial Expertise


    Why Hire a Santa Barbara Dual Certified Tax Attorney & CPA, Reason #5

    Avoiding Conflicts


    Why Hire a Santa Barbara Dual Certified Tax Attorney & CPA, Reason #6

    Saving Money


    Tax Help Videos

    Representing Clients from U.S. and International Locations Regarding Federal and California Tax Issues

    Main Office

    Orange County
    2601 Main St. Penthouse Suite
    Irvine, CA 92614
    (949) 681-3502

    Our headquarters is located in Irvine, CA. Our beautiful 19,700 office space is staffed full-time and always available for our clients to meet with our highly qualified and experienced staff of Attorneys, Certified Public Accountants and Enrolled Agents. We also offer virtual consultations and can travel to meet with clients in one of our satellite offices.

    Outside of our 4 hour initial consultation option, we do not charge travel time or travel expenses when traveling to one of our Satellite offices, or surrounding business districts, where it is necessary to meet personally with taxing authority personnel, make court appearances, or any in person meeting deemed necessary for the effective representation of a client. To make this as flexible, efficient, and convenient as possible, David W. Klasing is an Instrument Rated Private Pilot and Utilizes the Firms Cirrus SR22 to service client’s in California and in the Southwest by air. Offices outside these areas are serviced via commercial jet airlines. None of these costs are charged to our clients.

    Satellite Offices

    (310) 492-5583
    (760) 338-7035
    (916) 290-6625
    (415) 287-6568
    (909) 991-7557
    (619) 780-2538
    (661) 432-1480
    (818) 935-6098
    (805) 200-4053
    (510) 764-1020
    (408) 643-0573
    (760) 338-7035
    (602) 975-0296
    New Mexico
    (505) 206-5308
    New York
    (332) 224-8515
    (512) 828-6646
    Washington, DC
    (202) 918-9329
    (702) 997-6465
    (786) 999-8406
    (385) 501-5934