Your Right to Challenge the IRS’ Position and Be Heard

Taxpayers have the right to challenge the IRS’s position and be heard. This is one of ten of rights listed in the Taxpayer Bill of Rights, which clearly outlines the fundamental rights of every taxpayer.

The IRS Says That Taxpayers Have The Right To:

  • Raise objections.
  • Provide additional documentation in response to formal or proposed IRS actions.
  • Expect the IRS to consider their objections timely.
  • Have the IRS consider any supporting documentation promptly.
  • Receive a response if the IRS does not agree with their position.

While the IRS contemplates these rights are in place to assure a fairly administered tax system, in reality that is hardly the case as many people coming to me have expressed their unresolved tax problems and how the IRS has not helped them or is treating them unfairly not giving proper credence to their situation.

When Is The Best Time to Bring In A Board Certified Tax Attorney To Resolve Your Tax Problems?

First and foremost, you need a tax lawyer if you have a dispute with the IRS or any State Tax Agency. Most tax disputes arise in the form of an audit of one or several past tax returns. If the IRS notifies you of an audit, you should hire a tax attorney immediately. Your tax lawyer can communicate with the IRS on your behalf, be present during your audit and help negotiate a settlement, if necessary. Having experienced legal counsel helps ensure that you don’t overpay as a result of your audit.

In some instances, taxpayers ignore letters and warnings from the IRS because they’re scared or don’t know how to respond. In those cases, the IRS may have no choice but to threaten you with criminal charges for tax evasion. If you learn that you’re the target of an IRS criminal investigation, you’ll want to hire a tax lawyer—and do it quickly.

Your tax lawyer can reassure the IRS that you’re taking its investigation seriously, work with the IRS in an effort to help you avoid criminal charges and represent you in court if you are charged with a tax crime.

Second, a tax lawyer’s help can also be invaluable if you’re facing a complicated legal tax situation. This might include instances where:

  • You’re starting a new company and are trying to decide between the various ways to structure your company
  • You’re the executor of an estate and need advice regarding whether and how much is owed in estate taxes
  • You want to challenge the IRS on a tax decision or appeal an audit
  • You receive a Collections Notice telling you that tax is due and/or threatening collection action
  • You want to sue the IRS
  • You think or know that you’ve committed tax fraud

Most people have tax problems because they did not plan how to do business, how to record transactions or how to account and substantiate their expenses or they have taken inappropriate or unjustified risky positions on their tax returns. Being proactive by engaging a tax lawyer to avoid having these problems in the first place would be wise to pursue. Additionally hiring tax counsel early on should assure that you do not blow any appeals or communicate something to the IRS that you later wished you never did.

Questions to Ask When Interviewing Tax Lawyer

At your initial meeting with a lawyer, you’ll want to share the specifics of your situation and then ask the lawyer about his or her experience handling similar matters. Know that lawyers are bound by strict confidentiality rules. Even if you end up hiring a different attorney, the lawyers you meet with cannot share the information they learned with the IRS or anyone else.

Some questions to consider asking your lawyer during your initial meeting:

  • How long have you been practicing law?
  • Do you just practice tax law, or do you also work in other areas of practice?
  • What are your credentials as a tax specialist (such as Board Certified Tax Law Designation, LL.M.(Tax) Degree or C.P.A. License)?
  • Have you previously handled tax situations similar to mine?
  • What’s your assessment of my situation? What works for me and against me?
  • If I hired you, what course of action would you recommend?
  • Do you charge a flat fee or hourly rate, or do you use some other billing structure?
  • Can you estimate my total legal fees?

What Should You Do?

If you have outstanding tax problems or liabilities with the IRS or any State Tax Agency, protect yourself and preserve your right to challenge the tax agency’s position and be heard. Tax problems are usually a serious matter and must be handled appropriately so it’s important to that you’ve hired the best lawyer for your particular situation. The tax attorneys at the Law Offices Of Jeffrey B. Kahn, P.C. located in Orange County (Irvine), San Diego County (Carlsbad) and elsewhere in California are highly skilled in handling tax matters and can effectively represent you at all levels with the IRS and State Tax Agencies including criminal tax investigations and attempted prosecutions, undisclosed foreign bank accounts and other foreign assets, unreported foreign income and unreported crypto-currency income.

California office of tax appeals

California Starts Implementation Of New Tax Appeals Programs By Establishing The New “Office Of Tax Appeals”

On June 15, 2017, the California Legislature passed Assembly Bill 102, which transfers nearly all tax administration and appeal functions from the BOE to two new tax departments: the Department Of Tax And Fee Administration (“DTFA”) and the Office Of Tax Appeals (“OTA”).

Starting January 1, 2018, California State tax appeals will be heard by the Office Of Tax Appeals (“OTA”). Created by the Taxpayer Transparency And Fairness Act Of 2017, the OTA will replace the appellate process once handled by the State Board of Equalization (“BOE”). The BOE handles the enforcement of various types of state taxes – most notably Property Taxes and California Sales & Use Taxes. The OTA will hear and determine all appeals that involve corporate income tax, corporate franchise tax, personal income tax, sales tax, and use tax. If a taxpayer disagrees with the audit findings involving any of these taxes which are reflected on a Notice Of Action or a Notice Of Determination, the taxpayer may file an appeal with the new OTA by the “appeal date” listed on said notice. As of October 1, 2017, any such notice that gets issued will include an insert containing information about appeal rights and the OTA’s contact information. As of October 1, 2017 all appeals need to be filed with OTA, and beginning January 1, 2018, OTA’s three-member panels will hear and determine all appeals. The BOE will cease hearing these appeals after December 31, 2017.

Old System Was “Politically Connected”

The BOE was constitutionally created in 1879 with a mandate that property taxes would be fairly assessed and collected across California. Since that time, the BOE’s statutory authority has been expanded to administer the state’s sales and use tax and numerous other state taxes and fees. In addition, the Board, comprising four members elected from districts and the statewide-elected State Controller, also hears and decides tax disputes. Until the change in the law, California was the only state in the United States where administrative tax disputes were heard by elected representatives. Not only was it allowed but also it was encouraged that taxpayers (or when represented, their attorneys) contact each government official sitting on the five-member BOE panel in ex-parte communications to promote the taxpayer’s position in advance of the hearing.

Designed To Promoted Fairness

On June 15, 2017, the California Legislature passed Assembly Bill 102, which transfers nearly all tax administration and appeal functions from the BOE to two new tax departments: the DTFA and the OTA. The BOE still retains its constitutional duties which going back to its historical roots is the oversight of property taxes and assessment of state-assessed properties. Both the DTFA and OTA would be under the control of respective directors, each appointed by the governor and subject to confirmation by the California Senate.

The DTFA will be based in Sacramento and will administer state and local sales and use taxes, fuel and tobacco excise taxes, and a variety of other taxes and fees. The new law has no impact on State income tax audits which will still be conducted by the Franchise Tax Board (“FTB”) or employment tax audits which will still be conducted by the Employment Development Department (“EDD”). OTA would hear sales and use tax appeals from the DTFA and personal and corporate income tax appeals from the FTB.

The OTA was designed by the State Legislature to operate independent of any other State tax office and provides a venue where disagreements concerning the application of California State tax law can be resolved on a fair and impartial basis for both the taxpayer and the government. The OTA is supposed to take a fresh look at a taxpayer’s case and consider the strengths and weaknesses of the issues in the taxpayer’s case. The advantage of appealing a California State tax audit to this level provides the taxpayer with the opportunity to reach a mutually acceptable settlement without expensive and time-consuming court trials. This approach follows what the IRS and over half the State Tax Agencies have been doing for many years.

Within the OTA, there will be tax appeals panels consisting of three administrative law judges (ALJ’s). These ALJ’s must have state tax experience and each be a member of the California bar. OTA headquarters will be in Sacramento, with hearing offices in Sacramento, Fresno, and Los Angeles. The ALJ’s must issue written opinions for each appeal.

Although the OTA is not a judicial body or a tax court, it is now a step in California Tax Procedure for taxpayers to challenge tax audit decisions. Furthermore, decisions of the OTA can be appealed to California Superior Court for a “de novo review”. “De novo” is a form of appeal in which the court holds a trial as if no prior trial had been held.

Looking To Appeal A California State Tax Audit Report To The Office Of Appeals?

When taxpayers disagree with the findings of their California State tax audits, they may usually appeal to the OTA. The auditor agent will issue a Notice Of Determination to a taxpayer, which essentially provides the taxpayer with the opportunity to file a Tax Protest requesting his or her case be heard by the OTA. Hiring an experienced tax attorney should make a difference in getting the best possible result. The attorneys of the Law Offices Of Jeffrey B. Kahn, P.C. with locations in Orange County, San Francisco and elsewhere in California know how best to communicate directly to tax appellate bodies including the OTA and build a persuasive case on your behalf because we know how to present your case with legal argument and tax authority.

Looking To Appeal An Audit Report To The IRS Office Of Appeals? Let us help you

When taxpayers disagree with the findings of their IRS audits, they may usually appeal to the IRS Office Of Appeals. The IRS agent will issue a “30-day Letter” to a taxpayer, which essentially provides the taxpayer with up to 30 days to file a Tax Protest requesting his or her case be heard by an Appeals Officer.

The Office Of Appeals is independent of any other IRS office and provides a venue where disagreements concerning the application of tax law can be resolved on a fair and impartial basis for both the taxpayer and the government. The Appeals Officer will take a fresh look at the case and consider the strengths and weaknesses of the issues in your case. The advantage of appealing your IRS audit to this level provides us with the opportunity to reach a mutually acceptable settlement without expensive and time-consuming court trials.

Using a tax attorney to help with an appeal can significantly increase your chances of getting a better outcome. Many times individuals don’t realize that appeals can go both ways, you may actually end up being owed money after the appeal. A tax attorney can analyze your situation and find the best approach to take in order to get the best outcome. The IRS actually prefers working with professional tax representatives because it makes their job easier and helps the process move along more efficiently, which can actually result in a more favorable decision.

We will communicate directly with the Appeals Officer and build a persuasive case on your behalf because we know how to present your case with legal argument and tax authority. Of course, if we cannot reach agreement with the Appeals Officer, then we have the opportunity to appeal the case to the U.S. Tax Court.

Description: The Law Offices Of Jeffrey B. Kahn, P.C. has helped many people minimize or avoid adjustments from IRS appeals. Working with a tax attorney is the best bet for minimizing adjustments that would create liability to the IRS

Appealing the Results of a Tax Audit

Every taxpayer who is being examined in a tax audit has the right to dispute the auditor’s final determination.  You do not have to accept the auditor’s findings if you believe any or all of the adjustments are wrong and/or penalties should not be imposed.  Your best bet is to contact a California tax attorney who can effectively start the appeals process. Many people who have lost an IRS audit have seen the amount they owe in taxes reduced or even eliminated after hiring a tax lawyer in San Diego or elsewhere to help with them challenge the auditor’s decision.

Once the auditor issues the final determination, you have up to 30 days to file an appeal with the IRS. By working with a tax attorney, an effective and complete written protest letter is prepared and filed with the IRS Office Of Appeals challenging the determination. The IRS Office Of Appeals is a division of IRS that is separate from the Examination Division that performed your initial audit. This is done to ensure a level of transparency and fairness during the appeals process.  Within the next few months the IRS Office Of Appeals will notice you and your representative that the appeal as been assigned to an Appeals Officer.

The appeals process can be complex especially when the issues involve the correct interpretation and application of sometimes archaic tax provisions.  Therefore, you want to make sure you are prepared for your appeals hearing in order to secure the most favorable result. This includes collecting all of your relevant tax records and information ahead of time. You’ll also want to try and get as much information about the original tax audit as possible. You can file a Freedom of Information Act request on the auditor’s records — this will let you know the information they based their original decision on.

Even if your appeal has been denied or you disagree with the decision of the Appeals Officer, you are not out of options. The Law Offices Of Jeffrey B. Kahn, P.C. can help you to file a Petition in Tax Court to get the amount you owe reduced or eliminated. Many people who have lost their appeal have had the amount of their tax debt lowered by disputing the proposed adjustments in Tax Court.

The Law Offices Of Jeffrey B. Kahn, P.C. has helped many people appeal their tax audit. Working with a tax attorney is the best bet for reducing or eliminating the amount you owe.

Small Business Owners Can “Fast Track” Audit Process

The Law Offices Of Jeffrey B. Kahn, P.C. has some news of particular interest to small business owners. The Internal Revenue Service has given small businesses a chance to expedite the audit process with its new Fast Track Settlement program. Under the terms of the program announced by the IRS in November 2013, small business owners can work with their IRS audit attorney to avoid the formal litigation or administrative appeal process. In most cases, the FTS program means that audit issues are taken care of within 60 days.

The Fast Track Settlement program is modeled on a program that has previously existed for medium-sized and large-sized businesses with more than $10 million in annual income. A pilot version of the program started in 2006 and was expanded in 2008 and the IRS is now extending it to all small business owners.

It’s important to keep in mind that the Fast Track Settlement program doesn’t guarantee a positive resolution to your dispute which is why you’ll still want to hire IRS tax attorneys who understand the regulations to fight on your behalf. But what this program offers is to speed up the entire process, saving small businesses from potentially lengthy and costly litigation.

Although the Fast Track Settlement is presided over by an IRS appeals officer who is supposed to be acting as a “neutral party”, that Appeals Officer will not be able to provide you with any guidance or advice.  Because of this, it’s a good idea to work with an experienced San Diego tax lawyer with the Law Offices Of Jeffrey B. Kahn, P.C. to represent you during this phase of the process.