While routine matters can be handled by taxpayers or their professional preparers, audits, high stakes negotiations, tax liens and any IRS accusations of criminal activity need the expertise of a tax attorney. When you face serious sanctions from the IRS, you need an expert advocate on your side.
Audit Representations
You can expect a full court press from IRS auditors. Like any other professionals, they are judged on their performance, and that means they need to find errors that result in additional taxes and penalties.
IRS auditors start the process by finding every possible opportunity to increase tax bills. For example, if you earned non-employee compensation, an auditor may assume you owe self-employment tax; however, if the money was earned from activity other than self-employment, a tax attorney will quickly demonstrate that you do not owe this tax.
Audits can also get sticky when the IRS disputes deductions that are difficult to document. This often happens to small business owners who handle cash. A tax attorney understands the legal requirements for documentation and can prevent the IRS from charging you additional tax despite meeting legal standards for deductions.
When you clearly owe more tax because of a filing mistake, a tax attorney cannot force the IRS to stop collections; however, the attorney can negotiate on your behalf for penalty abatements and even reductions in the tax owed.
You Must Negotiate
The IRS has a reputation for being tough on taxpayers, but it also has created many programs that allow room for negotiations that can save delinquent taxpayers thousands. A tax attorney can evaluate your situation and determine which programs you most likely qualify for. For example, the offer-in-compromise program allows for penalty abatement and also lower taxes; however, the IRS approves less than half of offer-in-compromise requests. A tax attorney increases the odds of success through skilled negotiation.
Tax law has its own nuances, language and open questions. The average taxpayer enters negotiations with the IRS at a disadvantage as a result. As your legal representative, your tax attorney will get you the best deal possible.
Tax Liens
Tax liens are very expensive. They can result in numerous financial disasters, including paycheck garnishments, property seizures and levies against bank accounts and other assets.
The Fresh Start Program limits liens to taxpayers owing more than $10,000. If the IRS has determined you owe more than that, you can expect it to slap you with a tax lien unless you pay the full amount, negotiate an agreement with the IRS that prevents liens or appeal the IRS’s findings.
A tax attorney will review your case and file an appeal if the IRS’s claims are likely to be overturned in tax court. Often, the IRS will agree to a lower tax bill and an installment agreement that prevents liens, especially if a strong tax attorney pushes them to settle.
You Have Been Accused of Tax Fraud or Tax Evasion
Most audits and collection activity are handled as purely civil matters. Failing to pay or file results in fines, interest, collections activity and tax liens in most cases. However, there are situations where the IRS has a mandate to pursue criminal changes.
Tax evasion certainly qualifies. Usually, failing to pay or file is not enough to sustain a tax evasion charge. However, if the IRS finds evidence of a concerted effort to avoid taxes, it may open a criminal inquiry. For example, a wealthy person who intentionally understated income and hid taxable capital gains in an offshore account would be a candidate for a tax evasion prosecution. A business owner who cooked the books to avoid taxes could also face criminal liability.
If facing a criminal accusation, you need an attorney, even if you are as clean as the driven snow. You have to assume that anything you say will be held against you in a court of law. An attorney will advise you on what to say and can put an end to weak inquiries.
Once the IRS has a strong enough case to go to court, its conviction rate is very high. In fact, courts hand 8 of 10 tax fraud and evasion defendants a prison sentence. Early communication with a tax attorney allows you to stay in legal compliance and keep any tax disputes as a civil matter. On the other hand, a long trail of questionable activities without seeking legal advice can raise the antennas of criminal investigators.
No one likes dealing with the IRS, especially if they are flagged as potential tax absconders. Consulting a tax attorney allows you to avoid being targeted for audits and investigations and also achieves superior outcomes when facing IRS sanctions. If the IRS has undertaken aggressive actions against you, consult a tax attorney without delay.
If you are experiencing serious tax debt, you should take immediate action to resolve your tax problem. With over 20 years’ experience, our Tax Resolution Law Firm is experienced in all matters relating to tax resolution, tax dispute, and general issues relating to IRS tax and debt relief including audit representation, innocent spouse, offer in compromise, installment agreements and more!
Our tax attorneys are extremely knowledgeable in the local, state, and federal tax code, and can help. Contact our law firm today and get on the road to tax relief.
