Reasons to Hire a Tax Law Attorney
The IRS is probably the most feared arm of the United States government. There are people who fear the IRS more than they do the FBI or the CIA. In facing this branch of the government, you will need a lot of help. While some people may advice you to get a Certified Public Accountant, there are lot of reasons not to do so. In fact, what you should do is get a tax law attorney.
Finance tax attorneys - How significant are they
Why should you hire a tax law attorney?
First of all, facing the IRS means that you either haven't hired an accountant, or your current accountant has done a pretty bad job of managing your finances. This means that it is already too late to hire another CPA to fix your problem. The IRS has already done the math, so you will be wasting resources if you hire another person to do it all over again. You need to focus on areas that you still need to prepare for. What you need is a competent tax law attorney to help you with the legalities that you will be facing.
There is also the issue of client-attorney confidentiality. While a CPA can be forced to divulge any information concerning your accounts to a court, a tax law attorney is legally exempted from doing so. Remember that this confidentiality can be extremely important during trials.
Another advantage that tax attorneys have over CPAs is a deep understanding of the ambiguity of tax law. CPAs are trained to recognize something as either black or white. They are trained to categorize things very specifically and may not recognize the various gray areas of tax law. A good tax law attorney knows that the law can have a thousand different interpretations and uses this fact to your advantage.
A tax law attorney can also help you by giving you truly complete advice. This is because of the fact that they are experienced in matters involving tax laws. A tax law attorney will be able to give you advice on different legal measures that you can take to solve your Tax problems. A CPA can only help you in terms of fixing your budget or computing your taxes, but can offer very little help regarding how to fix your tax problems.
A tax law attorney, on the other hand, can show you a lot of things you can do to legally get the IRS off your back. A good tax law attorney can help you by giving you various tips on how to compromise with the IRS and end up paying much less than what you might think is your due.
The IRS can use different techniques to intimidate you into paying the amount that they will insist you owe. People who are unfamiliar with the methods of the IRS often pay this amount without taking the time to question why. A good tax law attorney can help you get over your fear of the IRS and meet them on the legal battleground. A good tax attorney will have the resources necessary to help you overcome any intimidation tactics that the IRS may use to force you to pay.
The best reason that you can have to hire a tax law attorney is the fact that taxes are based on laws. This means that taxes are the natural stomping grounds of tax attorneys. They know their ways around it and they know how to survive it.
Audit Representation
There can be nothing more terrifying than learning your tax returns have been selected for audit. In the event of an audit, OUr Pre-Screened Tax Attorneys can work on your behalf to present your case in the most persuasive manner. Whether you are being audited by the IRS or state of California call our referral center for a free consultation. Call today if you have recieved your first contact or a 90-day Deficiency Notice from the IRS or state of California.
The Examination (Audit) Process
The IRS examines (audits) tax returns to verify that the tax reported is correct. Selecting a return for examination does not always suggest that the taxpayer has either made an error or been dishonest. In fact, some examinations result in a refund to the taxpayer or acceptance of the return without change. The overwhelming majority of taxpayers files returns and make payments timely and accurately. Taxpayers have a right to expect fair and efficient tax administration from the IRS, including verification that taxes are correctly reported and paid with enforcement actions against those who fail to comply voluntarily.
Your Rights During an Audit Include:
- A right to professional and courteous treatment by IRS employees.
- A right to privacy and confidentiality about tax matters.
- A right to know why the IRS is asking for information.
- How the IRS will use it and what will happen if the requested information is not provided.
- A right to representation, by oneself or an authorized representative.
- A right to appeal disagreements, both within the IRS and before the courts.
How Returns Are Selected for Examination
The IRS selects returns using a variety of methods, including:
- Potential participants in abusive tax avoidance transactions — Some returns are selected based on information obtained by the IRS through efforts to identify promoters and participants of abusive tax avoidance transactions. Examples include information received from “John Doe” summonses issued to credit card companies and businesses and participant lists from promoters ordered by the courts to be turned over to the IRS.
- Computer Scoring — Some returns are selected for examination on the basis of computer scoring. Computer programs give each return numeric “scores”. The Discriminant Function System (DIF) score rates the potential for change, based on past IRS experience with similar returns. The Unreported Income DIF (UIDIF) score rates the return for the potential of unreported income. IRS personnel screen the highest-scoring returns, selecting some for audit and identifying the items on these returns that are most likely to need review.
- Large Corporations — The IRS examines many large corporate returns annually.
- Information Matching — Some returns are examined because payer reports, such as Forms W-2 from employers or Form 1099 interest statements from banks, do not match the income reported on the tax return.
- Related Examinations — Returns may be selected for audit when they involve issues or transactions with other taxpayers, such as business partners or investors, whose returns were selected for examination.
- Other — Area offices may identify returns for examination in connection with local compliance projects. These projects require higher level management approval and deal with areas such as local compliance initiatives, return preparers or specific market segments.
Examination Methods
An examination may be conducted by mail or through an in-person interview and review of the taxpayer's records. The interview may be at an IRS office (office audit) or at the taxpayer's home, place of business, or accountant's office (field audit). Taxpayers may make audio recordings of interviews, provided they give the IRS advance notice. If the time, place, or method that the IRS schedules is not convenient, the taxpayer may request a change, including a change to another IRS office if the taxpayer has moved or business records are there. The audit notification letter tells which records will be needed. Taxpayers may act on their own behalf or have someone represent or accompany them. If the taxpayer is not present, the representative must have proper written authorization. The auditor will explain the reason for any proposed changes. Most taxpayers agree to the changes and the audits end at that level.
Appeal Rights
Appeal Rights are explained by the examiner at the beginning of each audit. Taxpayers who do not agree with the proposed changes may appeal by having a supervisory conference with the examiner’s manager or appeal their case administratively within the IRS, to the U.S. Tax Court, U.S. Claims Court or the local U.S. District Court. If there is no agreement at the closing conference with the examiner or the examiner’s manager, the taxpayer has 30 days to consider the proposed adjustments and their next course of action. If the taxpayer does not respond within 30 days, the IRS issues a statutory notice of deficiency, which gives the taxpayer 90 days to file a petition to the Tax Court. The Claims Court and District Court generally do not hear tax cases until after the tax is paid and administrative refund claims have been denied by the IRS. The tax does not have to be paid to appeal within the IRS or to the Tax Court. A case may be further appealed to the U.S. Court of Appeals or to the Supreme Court, if those courts accept the case.
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Tax Resolution
Owing taxes to the IRS or state can be devastating to a family. Our Tax Attorneys have years of experience assisting families with back tax liabilities.
Depending on your situation, you may qualify for one of the following:
Offer in Compromise:
The Offer in Compromise or often-called "Pennies on the Dollar" is where a taxpayer makes an offer to the IRS to settle a back tax liability for less than the full amount. For example, if a taxpayer owes the IRS $20,000.00 the taxpayer could file an Offer in Compromise and request that the IRS accept only $200.00 to pay off the entire debt. The IRS accepts an Offer in Compromise from a taxpayer for a number of reasons, however the most common is "Doubt as to Collectibility." This means that a taxpayer is arguing to the IRS that they will never be able to full pay the amount of the tax liability, so the IRS should accept the amount offered. The IRS will accept an Offer in Compromise if they agree with the taxpayer. By doing so the IRS will save money by not spending resources on trying to collect on a liability that it never will receive full payment for and they also are able to give a taxpayer a fresh start. 1000Attorneys.com Pre-Screened Tax Attorneys can complete the required paperwork to submit to the IRS or state of California and conduct all negotiations on your behalf. For a free confidential tax analysis with a tax attorney call our office today.
Installment Agreement:
If a taxpayer can not pay a tax liability, the IRS may accept installment payments. These agreements are called Installment Agreements. The more a taxpayer owes to the IRS the more complicated these agreements are to negotiate with the IRS. There are three types of Installment Agreements, Guaranteed Installment Agreements, Streamlined Installment Agreements and Financial Statement Installment Agreements. The type of Installment Agreement depends on the amount owed to the IRS. For example, Guaranteed Installment Agreements are for taxpayers that owe less than $10,000.00. Streamlined Installment Agreements are for taxpayers that owe less than $25,000.00. Financial Statement Installment Agreements are for those taxpayers who owe more than $25,000.00. While each taxpayer's situation depends on the specific facts of the case, our pre-screened Tax Attorneys works closely with clients to negotiate an affordable Installment Agreement on a taxpayer's behalf.
Penalty Abatement:
There are three charges that make up most tax liabilities, the underlying tax liability, interest and penalties. The two most common penalties assessed by the IRS are the Failure to Timely File Penalty and the Failure to Timely Pay Penalty. The IRS will abate penalties if a taxpayer can show or prove "reasonable cause" for failing to timely file or timely pay the tax liability. If the IRS abates a penalty not only will the penalty be reduced or removed but all corresponding interest assessed on the penalty will also be removed. This can result in a substantial reduction in a taxpayer's tax liability. Our Tax Attorneys can draft a formal petition requesting that penalties be abated. The IRS will only abate penalties if they believe "reasonable cause" has been proven. Our law firm works with clients on a personal basis to determine whether a penalty abatement petition is in their best interest.
Currently Not Collectible:
The IRS may place a taxpayers back tax liability into Currently Not Collectible status if the taxpayer can prove they have no ability to make payments towards a back tax liability. While a back tax liability is in Currently Not Collectible status all collection actions will be suspended. This means that all tax levies will be removed. The IRS generally has 10 years to collect a back tax liability from the date of assessment. While an account is in Currently Not Collectible status the statute of limitations continues to run.
While each case varies depending on the specific facts of the case, according to the January 9, 2007 National Taxpayer Advocate's 2006 report to Congress once an account is designated by the IRS as Currently Not Collectible, data for the preceding six years shows that the IRS collected on less than 2 percent of all amounts due.
Tax Levy/Lein:
A tax levy can be issued when a taxpayer owes back taxes. The two most common levies are the wage levy and the bank levy. A wage levy is issued against a taxpayer's wages. A wage levy only leaves the taxpayer with sufficient income to meet necessary living expenses. Unfortunately, what the taxing authority deems necessary living expenses usually does leave the taxpayer without the ability to meet their actual living expenses. A bank levy issued against a taxpayer's bank account. While a wage levy is continuous, a bank levy only attaches against the funds in the account at the time the levy reaches the bank. Most tax agencies may release a levy if the taxpayer can prove the levy is creating an economic hardship, or the taxpayer proposes a resolution alternative, such a Offer in Compromise, Installment Agreement or Currently Not Collectible status. A taxpayer usually must be in tax compliance prior to the levy being released. This means that all back tax returns are filed. A tax lien can be issued when a taxpayer owes back taxes. A tax lien is a notice to third parties that a debt is owed. Tax agencies will generally not remove a tax lien unless the liability has been paid in full, the release of the lien will expedite full payment of the tax, or in the case of the IRS an Offer in Compromise has been accepted.
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