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San Jose, CA tax law attorney for IRS examinations

Many people have felt the sinking feeling that accompanies receiving a letter from the Internal Revenue Service (IRS). While it may be tempting to simply put the letter in a drawer and forget about it, ignoring the IRS can result in serious consequences. If you are contacted by the IRS and asked to make an office audit appointment, you should be sure to schedule the appointment, contact a tax lawyer for help if you need it, and attend the meeting. If you have already missed an audit meeting, you may wonder about the consequences you may face and what steps you can take to protect yourself.

Voluntary Appointments Versus Required Appointments

When the IRS examines a tax return and decides that the tax filer has misfiled, it may send a letter requesting an appointment. The tax filer may respond to the letter and schedule an appointment, or they may choose not to. If you have received a letter and did not schedule the appointment, the IRS has the authority to request a legal summons from a judge and demand that you attend it. If you fail to show up at an appointment that you personally scheduled, you will likely get the chance to reschedule the meeting without any major consequences. However, if you were required to be at the appointment because of a legal summons and do not show up, the consequences will be much more serious.

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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, CA cryptocurrency tax attorney

The Internal Revenue Service (IRS) has been sending letters to taxpayers who are involved in activities that use virtual currency to complete transactions. Though sent as educational notices, these letters may indicate that a person could be subject to a tax audit. Individuals or entities may receive this type of notice if they failed to report income or failed to pay taxes on virtual currency transactions. 

What Is Virtual Currency?

Virtual currency, also known as cryptocurrency, is a digital form of money that is issued and controlled by program developers. People may accept these currencies as a medium of exchange just like U.S. currency, or cryptocurrencies may be converted into cash or other forms of virtual currency. Virtual currency is deemed to be property for federal income tax purposes.

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San Jose tax lawyer, Offshore Voluntary Disclosure Program, OVDP,  undisclosed foreign assets, IRS requirementsU.S. taxpayers who own assets held in foreign countries are required to report the assets to the Internal Revenue Service (IRS) and pay taxes on income from the assets. For taxpayers who have not met their reporting requirements, the IRS has provided a variety of methods for compliance, including the Offshore Voluntary Disclosure Program (OVDP). However, the IRS has announced that the OVDP will end September 28, 2018.

Offshore Tax Compliance Options

The current version of the OVDP, which was instituted in 2014, allows taxpayers with undisclosed foreign assets to become compliant with IRS requirements, thus minimizing the civil penalties they are required to pay and avoiding the possibility of criminal prosecution for tax evasion. This program is meant to allow those who have willfully failed to report foreign assets to achieve compliance and pay any taxes that are owed, as well as applicable penalties. 

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