When to Work With a Tax Litigation Lawyer as Well as a Bankruptcy Lawyer
If you have a large amount of tax debt, it is possible that you also have other types of debt that are causing financial difficulties. You may be considering bankruptcy if you have a combination of tax debt, secured debt, and unsecured debt. In this case, you might be unsure whether to seek advice from an expert tax litigation lawyer or a bankruptcy lawyer.

When to Talk to a Tax Litigation Lawyer

There are certain tax issues that require assistance from a tax lawyer, regardless of whatever other financial problems you are experiencing. If you have any of the following issues, you should contact a tax attorney:

With What IRS Penalties and Charges Can Tax Preparers Be Charged
The IRS can go after professional tax preparers with many different penalties related to filing inaccurate or fraudulent tax returns. Targeting tax preparers allows the IRS to affect a large number of tax returns because each tax preparer can be responsible for completing tax returns for hundreds of taxpayers.

Some of the penalties related to understatement of tax that the IRS can charge tax preparers with include:

IRC § 6694(a) – Understatement due to unreasonable positions.  The penalty is the greater of $1,000 or 50% of the income derived by the tax return preparer with respect to the return or claim for refund.

The Most Common Criminal Tax Violations
The IRS reported 2,672 convictions for criminal tax violations in the 2016 fiscal year. While criminal tax charges are not common, the penalties —which can include jail time — are severe enough to cause any taxpayer to be concerned.

Most criminal tax penalties can result in a five-year prison sentence and $100,000 fine. You can also be charged with civil penalties for the same violations, and you may have any professional licenses revoked.

Common Criminal Tax Violations

Can You Request the IRS Waive Penalties Based on Medical Hardship
The IRS may offer penalty relief for taxpayers who can show a reasonable cause for failing to file tax returns or pay taxes. IRS penalties can be waived in certain cases, but the IRS will examine all of the facts and circumstances to determine if a reasonable cause exists in your particular case.

A typical situation that the IRS will consider a sound reason for failing to file or pay taxes is death, serious illness, incapacitation, or unavoidable absence of the taxpayer or a member of the taxpayer’s immediate family. If you owe a substantial amount of IRS penalties, you may want to consult with a tax attorney.

Facts Need to Establish Reasonable Cause Due to Medical Hardship

Do I Need a Tax Lawyer If I’m Being Audited
Whether you should consult with a tax lawyer depends on the specific facts relating to your tax audit. However, there are some circumstances where it is vital that you retain the services of a tax lawyer to make strategic decisions and negotiate with the IRS or state tax authority.

Types of Tax Audits

There are many different types of tax audits. You may be facing any of the following types of tax audits:

Why You Should Consider an "Offer in Compromise" to the IRS
An Offer in Compromise (OIC) is a program that allows taxpayers to  settle their tax debt for a lump sum which is less than the total amount owed. The IRS will look at your ability to pay, income, expenses, and assets to determine how much they are likely to recover from you. If the IRS is convinced that you are offering them more than they can reasonably expect to recover from you, they may accept your OIC to settle your tax debt.

Why the IRS Accepts OICs

There are three reasons that they IRS will consider accepting your OIC. First, if you can show that you do not actually owe the money to the IRS. This is referred to as an offer in compromise based on doubt as to liability.

Can an Employee Be Held Liable for Their Employer's Unpaid Taxes
An employee can be held liable for their employer’s unpaid taxes in certain situations. While most businesses withhold their employees’ income and payroll taxes and then transmit them to the IRS, there are cases where employers either do not withhold taxes or do not give the withheld money to the IRS. Employees need to be aware of their responsibilities as both taxpayers and a person responsible for collecting and paying a business’s income or payroll taxes.

Liability for Employee’s Unpaid Taxes

If your employer fails to withhold income or payroll taxes from your paycheck, you are still responsible for paying these taxes to the IRS. If you do not pay these taxes personally, you may face tax penalties, and you may not be eligible for Social Security, Medicare, or unemployment benefits.

Can-a-California-Tax-Lawyer-Help-Me-with-a-Sales-Use-Tax-Audit-300x200
A sales and use tax audit in California is initiated by the State Board of Equalization (SBE or BOE), and its purpose is to determine whether a business has properly collected sales and use taxes. It will examine if the business has accurately reported gross sales receipts, deductions and business purchases. A sales tax audit will also establish if the business is applying the correct rate of tax on sales of tangible property.

A California tax lawyer will be able to advise you on the types of records you will need to provide at a sales and use tax audit, since the documentation required will vary according to the type of business that is being audited. The records will generally include income statements, tax returns (state and federal), sales tax returns filed with BOE, customer and vendor invoices and resale certificates. Our tax law team can advise you based on your type of business and the nature of the audit exactly what records you will need to produce.

In a sales and use tax audit, your records will be reviewed going back as far as three years, in some cases even longer. One of the factors that can prompt an audit, in fact, is a significant change in figures from one year to the next, so multiple years will be involved in a sales and use tax audit.

Key-Steps-in-Preparing-for-an-IRS-Tax-Audit-300x167
It doesn’t necessarily mean you have done anything wrong, but it still is something every taxpayer should be prepared for: notification of an IRS tax audit. Of course the best approach to preparing for a tax audit would be to ensure that your tax filings don’t warrant any undue attention, but that shouldn’t prevent you from taking every deduction to which you are legally entitled. An audit may simply be based on random selection, but that is very rare. The most prudent assumption is that the IRS believes that there may be errors with your return that need to be addressed. If you’ve been selected for a tax audit, here are some of the important steps to take:

  1. Gather All Your Records – Be sure to have all of the pertinent documentation together in one place that will substantiate any deductions or exemptions you claimed on your returns. Generally, the IRS is happy to receive digital copies of records. If you don’t have all your records duplicates can usually be obtained from financial institutions and vendors, but that takes time. Therefore you should get started as soon as you are notified of the tax audit. If you are in business you should review your bank statements, and compare them to your tax returns to make sure you reported all of your income. You should have tax returns for at least the past three years.
  2. Research – Make use of IRS publications that explain the procedure for audits, your rights as a taxpayer, the appeals process and more. Keep in mind though that IRS publications do not always represent all the nuances of the law, and the IRS is not required to follow its own publications.