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Tax Audits and Administrative Appeals
The firm has extensive experience representing individuals, corporations, partnerships, LLC’s and estates and trusts in administrative tax audits and disputes with the IRS, California Franchise Tax Board, California State Board of Equalization, California Employment Development Department and County Assessor’s Office.
We pride ourselves on resolving cases as early in the process as possible in order minimize our clients’ tax liability and reduce ongoing expenses. We have the depth of experience and knowledge to handle a case through all administrative and legal channels while at the same time pursuing negotiations with government personnel to reach a satisfactory resolution.
We routinely handle sensitive tax cases that may involve substantial liabilities or potentially lead to a criminal referral for tax fraud or evasion.
Recent cases include a comprehensive payroll tax audit to determine worker classification, foreign bank account report (FBAR) penalty investigations and appeals, complex estate and gift tax audits, effectively defending trust fund recovery penalty assessments, defending a criminal tax investigation where there were unfiled tax returns for multiple entities.
The law firm handles all types of substantial tax collection matters involving the IRS, Franchise Tax Board, California Board of Equalization and the Employment Development Department. We work closely with our clients to devise an optimal strategy which may involve a payment plan, an offer in compromise, or a bankruptcy. In many cases our clients face multiple tax liabilities with multiple taxing agencies and are in need of immediate assistance to stop wage garnishments, bank levies and seizures by the tax authorities.
We provide resolutions for tax collection problems which may include:
Filing a Collection Due Process Appeal with the IRS to stop collection action and to request an alternative to enforced collection action.
Submit an offer in compromise to resolve a tax debt for a substantially reduced amount.
Amend tax returns or submit an audit reconsideration request in order to adjust liabilities that were assessed but are erroneous or are now contested.
Negotiate an installment payment agreement over a term as long as 72 months.
Order and analyze formal tax transcripts to determine if the tax agency has properly determined the tax liability and applied payments.
Obtain releases of wage or bank levies.
Negotiate “Currently Non-Collectible” status while the client is undergoing a financial hardship.
Apply for “innocent spouse relief” if the tax liability was due to the underrerporting of income by a spouse on a joint tax return.
Negotiate releases of tax liens so that the client can obtain a loan to pay off the tax debt.
Obtaining and evaluating tax transcripts to determine if the 10-year collection statute may have expired or is close to expiring.
Evaluating the advantages of filing for bankruptcy to discharge the tax debts. This may involve a strategy over a two to three year time period in order to allow the taxes to age sufficiently for discharge.
Undeclared Offshore Bank Accounts and International Tax Compliance
Under the recently-enacted Foreign Account Tax Compliance Act (FATCA), banks and financial institutions, in virtually every country in the world, must provide foreign bank account information directly to the Internal Revenue Service. U.S. citizens, green card holders and residents must annually report foreign accounts with a cumulative balance exceeding $10,000.00 on a Foreign Bank Account Report (FBAR) known as FinCen Form 114 (formerly known as Form TDF 90-22.1) by April 15th of each year.
The failure to file an FBAR or report interest from a foreign bank account or gains from a foreign securities account can result in both severe civil penalties and criminal prosecution. Any taxpayer who willfully fails to disclose foreign accounts can be subjected to a maximum penalty equal to the greater of $100,000 or 50 percent of the entire cumulative foreign account balance. There is a six year statute of limitations on the assessment of the penalty. Even if the failure to file an FBAR is non-willful and non-negligent, the penalty is $10,000 per account per year.
Our law firm has experience negotiating and resolving foreign account compliance and reporting cases. The IRS has various programs to address compliance issues including the Offshore Voluntary Disclosure Programs (OVDP), the Streamlined Foreign Compliance Procedures, the Streamlined Domestic Offshore Compliance Procedures, and the Delinquent FBAR Submission Procedure which may result in lower penalties but have substantial risks that need to be evaluated with an experience tax attorney in this complex area of the law.
We often provide legal assistance to other tax professionals, financial advisors, bankers, and lawyers to assist the client in obtaining the best possible outcome and averting criminal prosecution.
Vaught & Boutris LLP has unique and extensive experience in handling the tax matters in bankruptcy. Unlike other tax firms that only provide an outside role in consulting with bankruptcy counsel, Vaught & Boutris handles all aspects of a bankruptcy case from start to finish. The types of tax matters the firm handles in bankruptcy includes the following:
Determining the dischargeability of tax obligations in Chapter 7, Chapter 11 and Chapter 13 bankruptcies, including Federal and state income taxes, sales and use taxes, employment taxes, excise taxes and other liabilities arising under federal and state tax laws.
Litigating disputed tax liabilities in bankruptcy court, particularly where the taxes were not timely challenged administratively. Bankruptcy Court allows an alternative forum to dispute a tax liability while under the protection of the court and without the need to full-pay the liability in order to obtain a full evidentiary hearing on the merits of the contested tax assessment.
Analyzing the tax impact of foreclosures, short sales, settled debts and cancelled debts prior to after the filing of a bankruptcy case. As a general rule, debts discharged in a bankruptcy proceeding are not subject to taxation as cancellation of debt income.
Advising clients on the use of bankruptcy in order to develop an effective financial strategy to get a fresh start and rebuild their lives.
The law firm has extensive experience representing businesses and sole proprietors in handling federal and state employment taxes. These matters include the following:
Worker classification disputes in which the IRS or Employment Development Department seek to recharacterize independent contractors as employees.
Collection issues which arise as a result of delinquent payroll taxes or payroll tax payments.
Representation of individuals who are targeted by the IRS or EDD for criminal investigation and prosecution due to failure to report employees and/or pay employment taxes.
Representation of individuals who are facing personal liability as a responsible officer for failing to pay employment trust fund taxes to the IRS or EDD.
Seeking abatement of penalties or refunds for failure timely to pay employment taxes.
Offer in compromise with IRS or EDD to substantially reduce payroll tax liability due to financial circumstances.
Sales and Use Taxes
The law firm has handled hundreds of cases involving sales and use tax disputes with the California Board of Equalization. We believe it is critical to involve competent legal counsel early in any sales tax dispute to present records and documents effectively and minimize exposure to invasive and expansive audits. These matters include:
Sales and use tax audits.
Administrative appeals before a hearing officer in the Board of Equalization to contest a proposed sales and use tax assessment.
Compromise of disputed sales tax assessments with the Settlement Bureau at the Board of Equalization.
Administrative appeals before the five member Board of Equalization in Sacramento.
Criminal investigations and prosecutions by the Board of Equalization regarding sales and use tax evasion.
Administrative appeals to dispute potential personal tax liability for sales and use tax obligations incurred by businesses and business entities pursuant to Section 6829 of the Revenue and Taxation Code.
Offers in compromise on final sales and use tax assessments.
Criminal Tax Investigations and Prosecutions
The law firm has experience defending administrative and Grand Jury investigations and criminal prosecutions where allegations include failure to report income, overstated business expenses or deductions, failure to file tax returns, presentation of false documentation, cash transactions, failure to pay trust fund employment taxes, failure to file foreign account information reports such as FBARs and evasion of tax collection. We understand that a criminal investigation or prosecution can be a devastating experience for any person. We have had success in establishing early communication with investigators in order to present factual and legal arguments to defuse an investigation and hopefully move the case to a non-criminal status.
Our firm is able to apply its tax and legal expertise to explore every possible defense, every mitigating circumstance and create a legal strategy to respond to any criminal tax investigation or prosecution. We believe it is imperative to have qualified tax counsel as soon as possible in this process in order to avoid decisions that could be irrevocable and have disastrous consequences.