Bakersfield IRS Attorney

Written by Sam Brotman, J.D., LL.M. (Taxation), MBA — Managing Attorney, Brotman Law  ·  Updated May 2026

What the IRS Does in Bakersfield

The IRS Fresno Field Office covers the Central Valley including Bakersfield and Kern County. Field examinations — in-person audits — for Bakersfield-area taxpayers are handled out of the Fresno office. Most correspondence audits are handled through the IRS campus system rather than the local field office. IRS collection cases in Kern County are handled by the Automated Collection System (ACS) or by field revenue officers from the Central Valley Collection area.

The three types of IRS contact and how to read them:

• Audit notice (CP2000, 30-day letter, Letter 2205): This is an Examination matter. The IRS has selected a specific tax return for review and is questioning particular items. A CP2000 is the IRS's automated matching notice — it is comparing income reported on third-party forms against what appeared on your return. A 30-day letter proposes specific adjustments. You have appeal rights at both stages.
• Revenue officer contact: This is a Collection matter. A revenue officer is a field employee with authority to visit your home or business, issue summonses, file federal tax liens, and recommend levies. A revenue officer contact means there is an existing balance the IRS has been unable to resolve through automated channels.
• IRS Criminal Investigation (CI) special agent: If someone identifies themselves as an IRS special agent, do not answer any questions. Contact a criminal tax attorney before any communication. CI is the criminal enforcement arm — a CI contact is not an audit.

Common IRS Issues in Bakersfield

Oil and Gas — Percentage Depletion and IDC Deductions Under IRC § 613A

Kern County is one of the most active oil and gas producing regions in California, and IRS examination of oil and gas tax deductions — particularly percentage depletion and intangible drilling costs — is a consistent issue for Bakersfield producers.

Percentage depletion under IRC § 613A allows independent oil and gas producers and royalty owners to deduct a percentage of gross income from oil and gas wells. The statutory rate for oil and gas is 15% of gross income, subject to a 100% of net income limitation. The IRS examines percentage depletion claims for: whether the taxpayer qualifies as an "independent producer" under § 613A(c) (major integrated oil companies do not qualify for the enhanced depletion rate); whether the gross income from the property is correctly calculated; and whether the net income limitation is properly applied. Kern County oil producers with complex royalty and working interest structures face examination on all three questions.

Intangible drilling costs (IDCs) under IRC § 263(c) are the costs of drilling an oil or gas well that are not associated with the physical equipment — labor, chemicals, mud, grease, and similar costs. IDCs can be deducted in the year incurred for productive wells, providing an immediate deduction rather than capitalization and cost recovery over the well's productive life. The IRS examines IDC deductions for: proper allocation between tangible and intangible costs; whether the well is productive (non-productive wells have different treatment); and whether the IDC election was properly made. Large IDC deductions that produce net operating losses (NOLs) in years when oil prices are low are a recurring examination focus.

Royalty Income and Working Interests

Kern County landowners with mineral rights receive royalty income that is taxable federal income, and the tax treatment of royalties versus working interests affects both the applicable deductions and the self-employment tax analysis.

Royalty income — payments for the right to extract minerals from a property — is ordinary income to the royalty owner and is reported on Schedule E. Royalty owners are entitled to claim depletion (either cost depletion or percentage depletion, whichever is larger) against the royalty income. Working interest owners — those who actively participate in oil and gas operations and bear the costs — have a different tax profile: working interest income is treated as active business income, IDC deductions are available, and the passive activity loss rules under IRC § 469 apply differently than they do to royalty owners.

The IRS examines royalty reporting for basis issues, unreported royalty income identified through Form 1099-MISC cross-matching, and improper depletion calculations. Oil and gas royalties in Kern County can represent substantial income for landowners, and errors in reporting attract IRS attention through the automated document-matching system.

Agriculture and Farming — Hobby Loss and Cash Accounting

The Central Valley's agricultural sector creates the same IRS issues in Kern County as in Sacramento and Fresno: hobby loss scrutiny under IRC § 183 for farms that consistently report losses, and cash method accounting issues around pre-paid expenses.

Under IRC § 183, a farming activity that is not engaged in for profit is subject to deduction limits — losses can only be deducted to the extent of income from the activity. The IRS examines farm returns claiming consistent losses using a nine-factor test under Treas. Reg. § 1.183-2(b). Kern County farms that appear to generate tax benefits by sheltering non-farm income are a regular examination target. The five-of-seven-year presumption of profit under IRC § 183(d) can be a starting point for demonstrating that the farm is a legitimate business, but it is not conclusive.

Pre-paid farm supply expenses — deductible in the year paid by cash-method farmers under Rev. Rul. 79-229, subject to a 50% limitation — and the timing of grain and commodity sales are issues the IRS examines when there are significant year-to-year variations in reported income.

Construction — Subcontractor Reporting and Worker Classification

Kern County's active construction sector creates IRS examination issues around Form 1099-NEC reporting compliance and worker classification for contractors and subcontractors.

Construction companies that pay subcontractors must issue Form 1099-NEC for payments of $600 or more annually. Failure to issue 1099s, or issuing them with incorrect amounts, creates information return penalty exposure under IRC § 6722 and can trigger payroll tax examination if the IRS determines the "subcontractors" were actually employees. The distinction between a legitimate subcontractor and a misclassified employee matters significantly in construction — the question of control over how, when, and where the work is performed is the core test.

Federal Tax Court for Bakersfield Taxpayers

Fresno does not have regular U.S. Tax Court sessions. Bakersfield and Kern County taxpayers with Tax Court cases are typically assigned to either the San Francisco or Los Angeles Tax Court calendar, depending on the matter and where it is petitioned. The IRS generally assigns cases to the Tax Court location geographically closest to the taxpayer's address of record.

When the IRS issues a Notice of Deficiency (the "90-day letter"), the taxpayer has 90 days from the mailing date to file a petition under IRC § 6213. This deadline is absolute. Missing it means the IRS can assess and collect the deficiency immediately — the Tax Court loses jurisdiction and the only remaining option is to pay and sue for a refund in federal district court.

Filing a Tax Court petition does not mean you are going to trial. The majority of cases settle at the IRS Independent Office of Appeals before any trial session. The petition is the step that preserves your rights and creates the opportunity for a pre-trial settlement conference. For Bakersfield taxpayers, the San Francisco or Los Angeles Tax Court sessions are a day trip — I handle travel for hearings and proceedings as the matter requires.

IRS Collections in Bakersfield

IRS collection matters in Kern County are handled through the Automated Collection System (ACS) for routine cases and through Central Valley field revenue officers for escalated matters.

ACS manages most collection cases through phone and mail — installment agreements for smaller balances, levy notices, and collection correspondence. ACS employees do not visit taxpayers in person.

Central Valley revenue officers handle larger or more complex collection cases. A revenue officer contact means the IRS has concluded that ACS cannot resolve the balance — typically because of the balance size, compliance history, or prior defaults. Revenue officers can visit your home or business, issue summonses, file Notices of Federal Tax Lien in the Kern County Recorder's office, and recommend bank account or wage levies.

Resolution options in a Bakersfield collection matter are the same as elsewhere in California: installment agreement under IRC § 6159, Offer in Compromise under IRC § 7122, Currently Not Collectible status under IRM 5.16, or a strategy around the Collection Statute Expiration Date (CSED) under IRC § 6502. Oil and gas producers and farmers in Kern County often have cyclical income — years with high income followed by years with losses — which can affect both the IRS's assessment of collectibility and the appropriate resolution approach. See our full guide on IRS collections defense.

About Sam Brotman

I am the managing attorney of Brotman Law, a California tax law firm I founded in San Diego in 2013. I hold a J.D., LL.M. in Taxation, and CPA license. The LL.M. in taxation is the postgraduate law degree specific to federal tax practice. I am admitted before the U.S. Tax Court and all IRS divisions under Form 2848.

Since 2013, Brotman Law has represented 2,500+ matters in audits and recovered or saved $1B+ in taxes and penalties. Central Valley clients — including oil and gas producers, farmers, and construction businesses in Kern County — are part of that practice. Most Bakersfield clients work with me by phone and video. You can reach the office at (619) 378-3138. To talk through your IRS matter, book a free 15-minute call.