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San Jose, CA tax compliance attorneyMost people know that paying taxes is not optional. However, sometimes something as simple as a mistake or miscalculation on a tax return can result in a tax compliance issue. When the Internal Revenue Service (IRS) discovers a problem with an individual’s tax return, the first method for contacting the taxpayer is typically a letter through the mail. If the issue is not resolved through the mail, an IRS officer may sit down with the taxpayer in a face-to-face meeting to discuss the compliance concerns. If you have been contacted by the IRS because you have not adequately met your tax obligations, an experienced tax lawyer can help you understand your options and protect your rights.

Make Sure That it Is Actually the IRS Who Is Contacting You

In recent years, there has been an uptick in the number of scammers pretending to be IRS agents. A scammer will typically make a phone call to an unsuspecting taxpayer and impersonate an IRS agent for the purposes of gaining access to personal identifying information or stealing the individual’s money. The IRS very rarely makes phone calls regarding tax issues. If an IRS worker does call you, he or she will not demand immediate payment or ask for credit card details over the phone. According to the IRS’s official website, anyone who receives a suspicious phone call from someone claiming to be with the IRS should hang up and call the IRS directly to discuss any potential compliance issues.

Know What to Expect During an IRS Meeting

The IRS recently announced that it will be increasing the number of revenue officers who make in-person visits to taxpayers. These face-to-face meetings will be focused in communities that have been especially affected by reduced IRS resources. In-person meetings only occur after the IRS makes several attempts to contact the taxpayer via mail. These meetings are typically unannounced. The IRS officer should provide two forms of credentials in order to verify that he or she is indeed an IRS worker. If he or she does not offer identification, you have the right to ask to see these credentials. The officer will then discuss your tax concerns and help you understand your options for resolving the issues.

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San Jose tax attorney for IRS auditsIf you are the subject of an Internal Revenue Service (IRS) audit, you likely have many questions about what the auditing process will entail. The IRS may have chosen you for an audit after comparing your tax return against “norms” for comparable returns, or you may have been selected because your tax returns involved transactions with other taxpayers who have been selected for an audit. The IRS manages audits through the mail and/or in-person interviews. As part of the auditing process, the IRS will request access to certain documents and financial information that supports the income and deductions claimed on your tax return.

Common Records Requested by the IRS

The documents and records that the IRS will want to examine during an audit can vary depending on your specific circumstances and the basis for the audit. Commonly, the IRS will request copies of:

  • Receipts: You may be asked to send the IRS receipts proving purchases you have made or money you have received for a product or service.
  • Canceled checks 
  • Bills: The IRS may request bills showing the person or entity receiving payment, the type of service received, and the dates on which you paid them.
  • Loan agreements: You may need to send copies of loan applications or agreements as well as information about how you used money that was loaned to you.
  • Travel logs and tickets: The IRS may want to examine travel plans and dates, mileage information, tickets, and expenses.
  • Theft or loss documents: If you experienced a theft or loss, the IRS will want to see insurance reports describing the loss, police reports, adjustor appraisals, and other relevant information.
  • Medical records
  • Legal documents: The IRS will likely want copies of documents related to property acquisition, tax preparation, divorce settlements, custody agreements, and any civil and criminal cases you have been involved in.

Your Rights During an IRS Audit

It is critical for anyone going through a tax audit to remember that they have certain rights as a taxpayer. In addition to professional and respectful treatment from IRS employees, you also have a right to confidentiality, the right to know why the IRS is auditing you, the right to know how the IRS will use any information gathered, and the right to know what the consequences will be if you do not provide the requested information. Most importantly, you have the right to be represented by a qualified tax lawyer. If you disagree with the IRS’s findings, you have the right to challenge or appeal the IRS auditor’s decision or file a petition with the U.S. Tax Court.

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San Jose, CA tax law attorney for expatriates

When an individual chooses to move to another country, he or she may relinquish his or her United States citizenship. However, many of these former citizens may not know that they have unfulfilled tax obligations to the United States. Unpaid back taxes can result in additional debt due to accruing interest as well as serious penalties. Fortunately, the Internal Revenue Service (IRS) recently announced the creation of several procedures through which former citizens can be relieved of their U.S. tax responsibilities.

Former Citizens Must Meet Certain Criteria for Tax Relief

If you are an expatriated person who is not currently compliant with U.S. tax laws, you may worry whether or not you can even afford to pay your back taxes. Unfulfilled tax obligations can quickly spiral out of control – especially when a person was not aware that he or she even owed back taxes. In an effort to help former citizens come into compliance with the law, the IRS is allowing qualifying individuals to be relieved of their tax obligations. These individuals must meet certain criteria in order to be eligible for tax relief. The criteria for “Relief Procedures for Certain Former Citizens” include:

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: San Jose tax relief lawyerWhen an individual fails to pay his or her taxes, the Internal Revenue Service (IRS) has the authority to collect taxes, penalties, and interest by garnishing the individual’s wages. Typically, creditors are required to get a judgment before they can garnish wages, but the IRS does not need to meet this requirement. Furthermore, the IRS is often authorized to garnish a much greater amount of a person’s wages than other creditors can take. The best way to avoid wage garnishment is to prevent collection actions in the first place. However, this is not always possible. Fortunately, there are still actions you can take that may be able to stop wage garnishment.

Responding to a Collection Due Process Notice

When tax debt goes unpaid, the IRS may issue you a Collection Due Process notice. This notice is to inform you that your future wages will be intercepted for the purpose of debt repayment. You then have 30 days to request a hearing and formally respond to the notice. The most common ways to prevent IRS collection actions such as wage garnishment include:

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San Jose, CA quarterly tax payment attorney

If you have foreign bank or financial accounts, you should be aware that there appears to be a change in the way penalties are calculated in instances of an unintentional breach of tax law. The change could mean significantly higher financial penalties for those who are not in compliance.

This change was signaled in an opinion rendered by the U.S. District Court for the Central District of California in the case of United States of America v. Jane Boyd. The court ruled that a breach of the filing obligations of the reports of foreign bank and financial accounts, or FBAR, could incur a penalty of up to $10,000 per foreign financial account.

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