3d man thinking with red question marks over white background

When you are notified that you have been chosen for a tax return audit, you may not be sure what to do next. How do you prepare for an intense inspection of your tax documents and ensure you can answer any questions the tax auditor may have? Hiring a tax attorney can be the best way to prepare for this in depth look at your tax situation. Here are a few benefits of having an experienced tax that understands all aspects of the tax law on your side.

Tax Attorneys Versus CPAs

Your first thought may be to hire an accountant or CPA to help you prepare for a tax return audit. While an accountant may understand the tax code, they may not be educated in defending clients in an audit situation. A tax attorney has not only the tax knowledge needed to help you prepare for the audit, they can also help negotiate on your behalf during the audit and defend you if necessary in subsequent litigation. You have someone on your side that can interpret the law in your best interest and protect your assets and freedom if there are any issues uncovered during the audit.

Concept of businessman thinking with arrows coming from tax

Tax season is difficult enough. When living abroad, it can become even more complicated. As a U.S. citizen, you must file a tax return with the IRS, regardless of where you are living in the world. You also may need to pay and file taxes in the country where you live. Here are a few of the tax considerations that may affect you while you are living or working abroad.

Worldwide Income

Your tax return must include all your income, whether or not it was earned on U.S. soil. Income earned in a foreign country is taxable by the IRS and must be claimed on your tax return. It may also be taxed by the country where it is earned, causing a double taxation situation. However, you may be able to deduct the tax that you pay to another country. But this can be tricky. Number one, it must be considered deductible by the IRS, which can depend on the country where you are living. Secondly, you must be able to prove you paid the taxes – this can be difficult due to the difference in tax years, and documentation available in various countries.

Closeup of tax wooden blocks on mallet at table in courtroom
The IRS announced that effective Oct. 1, 2016, it will rarely conduct Appeals Conferences in person. More specifically, Internal Revenue Manual (IRM) 8.6.1.4, blandly entitled “Conference Practices,” provides that ALL conferences will be held by telephone except under certain specific enumerated circumstances. Those circumstances are as follows:

  • There are substantial books and records to review that cannot be easily referenced with page numbers or indices
  • The ATE [that’s Appeals Team Employee, aka Appeals Officer, or Settlement Officer] cannot judge the credibility of the taxpayer’s oral testimony without an in-person conference

Protecting Your Assets from IRS Seizure
Owing the IRS money can result in many consequences, including losing assets to an IRS seizure. No one wants to lose their home, vehicle, bank accounts, or other assets due to a dispute regarding unpaid back taxes. It is important to understand how to protect your assets from IRS seizure if you are struggling with back tax debt. Here are some tips that we can provide from our experience as tax attorneys regarding asset seizure.

Understand the IRS Seizure Process

The IRS will not seize your property overnight. You will be warned and have the opportunity to appeal the decision or pay the back taxes due before your assets are levied. You will receive a “Notice of Demand for Payment” as the first step of the asset seizure process. If you have received this notice and do not pay the amount requested in the time frame given, the IRS will move forward in trying to obtain your assets for payment.

tax evasion

One of the most serious crimes one can face from the IRS is a charge of tax evasion. If convicted, a person can face a felony charge, large fines and prison time. If you have been charged with tax evasion or are under criminal investigation for tax fraud, you do not want to face this predicament alone and you should know your rights under the law.

Tax Evasion Charges

Tax evasion is considered a form of tax fraud and refers to an intentional avoidance of paying your taxes. It is not a simple misunderstanding or carelessness when filing your tax return; it is a purposeful evasion of paying taxes through specific behaviors. Evidence that you intentionally provided false information, hid income or concealed assets to mislead the IRS can be used to compile a case against you for tax evasion.

Retirement Jar
The Taxpayer Advocate is a tireless champion of taxpayer rights. The Taxpayer Advocate is required by law to issue reports to Congress. Her most recent mid-year report was recently released. One of her issues was that the IRS continues to levy on retirement accounts even though the IRS guidance to its revenue officers is “insufficient to protect taxpayer rights.” As her report points out, the IRS has identified three steps which MUST be taken before a Notice of Intent to Levy can be issued on a retirement account such as IRA Qualified Pension, Profit Sharing, and Stock Bonus Plans under ERISA, and Retirement Plans for the Self-Employed (such as SEP-IRAs and Keogh Plans). These steps are:

  1. Determine what property (retirement assets and non-retirement assets) is available to collect the liability;
  2. Determine whether the taxpayer’s conduct has been flagrant; and

Depressed businessman sitting under falling papers
Bankruptcy Appellate Panel Finds in Favor of the Taxpayer in Late-Filed Taxes Discharge Question

In the previous blog post we set forth the facts in a bankruptcy proceeding where the IRS argued that taxes filed even one day past assessment would result in the nondischargeability of the debt in bankruptcy. In this post we will examine the Bankruptcy Appellate Panel’s (BAP) analysis and issued guidance in the proceeding In re Kevin Wayne and Susan Martin, EC-14-1180-KuKiTa (9th Cir. BAP 2015).

Bankruptcy Court Found the Tax Debts Were Dischargeable