Will I Go to Jail As the Result of Getting Audited by the IRS?


If you make a mistake on your tax return, the government isn’t going to put you in jail, but if you make a big mistake on your tax return and it was accompanied by the willful knowledge that you intended to make that mistake, the situation is different. For instance, if you said I’m just not going to report any income or I’m going to try and conceal income so I don’t have to pay taxes ie. I’m going to evade taxes or if you deliberately file a tax return that’s false or engage in any of the tax penalties, yes you can go to jail for that. The auditor is not going to be the one that puts you in jail but what happens is with civil audits, which are a great referral source for the criminal division of the IRS, a lot of times what will happen is the government will engage them and they call it a parallel investigation. They’ll have a civil auditor who’s conducting a civil audit, the auditor will find something, and they will report it to the criminal division.

Read more

What Advice Can You Give Me About Setting Up a Payment Plan With the State of California?

So the first thing that I would tell you about setting up a payment plan for delinquent tax liability is California is going to be much more aggressive in payment of that liability than the IRS. One, California is pretty cash-strapped so the thresholds for the seriousness of a certain liability are a lot lower than they are at the IRS level. So for example if you owed $20,000 to the IRS it’s not really that huge of a deal. The IRS has hundreds of thousands of people that owe only $20,000. With California, $20,000 liability will get you into what’s called the complex account recovery unit. So California takes smaller liabilities much more seriously than the feds do. They’re a lot quicker to assess them, they’re a lot quicker to take collections actions, and they’re a lot more aggressive in their collections actions. One of the problems with dealing with the state of California is everything with the IRS is usually pretty formulaic and it’s regulated by the Internal Revenue manual. California, we will take

Read more

What Is a Tax Lien?

A Tax lien is a security interest that the government has in any real or personal property that the taxpayer owns. So what does that mean? In reality if you owe an obligation to the IRS or to the state, then a lien is the government’s way of protecting its interest in case you were to liquidate any property. So let’s take a house because that is the example that we run into most commonly for taxes. If you own a house and if the house has equity and the government puts a lien against it then when you go to sell that house the government is going to take its share of what you owe before you get any proceeds. So a lien is just simply protecting the government’s interest saying “hey we’re the IRS, we’re the state of California, we have a right to the equity in this property prior to it being sold.” So what a lien does those two things: number one it protects the government’s interest and number two liens are a matter of public record so when a lien shows up, it has the tendency to either damage the taxpayer’s credit or it could be discoverable.

Read more

Help Me! I Have a Government Agent at My Door, What Do I Do?

So the first thing is don’t talk to the agent. Get the agent’s card, get their contact information, figure out who that person is and then pause and take a deep breath. Agents show up at your door for a couple of reasons. Number one, you owe them money and they’re trying to collect. Number two they’re auditing you but usually when they’re auditing you they’ll be sending you a letter and say “Hey I’d like to set up an appointment” so that you can be audited. It’s not like people go through surprise audits. Number three are Criminal Investigation people and obviously if the criminal investigative agent shows up to your door, you want to be very careful what you tell them but even with a civil collection agent, somebody paying a surprise visit to you is not really a welcome thing and you’re probably not prepared for it. So the easiest thing to do is to say “hey I can’t talk to you, I need to run this by an attorney.

Read more

My Corporation Has Been Suspended by the State of California What Do I Do?

My Corporation Has Been Suspended by the State of California What Do I Do? So the first thing is if your corporation has been suspended you’ve probably got some sort of notice and or you went to the California Secretary of State website notice that your corporation was suspended and there’s a listing for it so number one, if you have a corporation in California that means you took the steps to create that corporation or this can be for an LLC or partnership just gonna use corporation down to shortly the nomenclature so if you have a corporation California registered with the Secretary of State then there’s generally two reasons why corporations get suspended one is the failure to file a statement of information? So a statement of information is a record that you keep on a yearly basis with the Secretary of State just saying here’s my corporation here’s the address the corporation here’s who the officers are if you haven’t changed any of these things from year to year you can literally file this form online cost you 25 bucks and it’s like filling in a post card it’s.

Read more

What Is a Dual Determination?

So a dual determination happens when you have a situation with a business that either accrues payroll tax liability or sales tax liability. What happens in that case is when you have a payroll tax or sales tax liability with the business, the state or the IRS can hold the officers of the company responsible personally if they did not pay those taxes. So there’s certain taxes that we refer to as trust fund taxes and those are monies that are held in trust for the benefit of somebody else so a common example of this has to do with payroll taxes. When you don’t pay payroll taxes there’s a portion of those payroll taxes that are the employer’s responsibility but there’s also a portion which are the employees responsibility. So for the employees portion of those taxes, the government can hold you responsible for that. What a dual determination really hinges on is who is responsible for the non-payment of taxes, whether they had knowledge or whether they were aware of the fact that taxes weren’t getting paid, and whether they could have done something to pay those taxes. So generally speaking if you are aware of a liability and you chose to pay other creditors that warrant, the government is going to hold you liable. So the dual determination process is a very strategic one because when you have a situation where you have multiple officers

Read more

How Do Sales Tax Audits Work in California?

So here’s how the sausage is made with respect to a sales tax audits. The state decides to audit you, California sends you a letter that says “hey you’re being audited” and then you will respond to that letter and that kicks off the audit process. So from a practical perspective what happens is the government will usually issue an audit request for three years of information or in the case of a sales tax audit, they’re doing it over twelve quarters. So from the outset of a sales tax audit, you need to understand what your risk is. You ideally want to go through the twelve quarters, maybe not in full at the beginning, but at least have a general understanding to know where the pitfalls are in the audit and then depending on where your pitfalls are, that’s going to determine what the plan is with the auditor. 

Read more

Brotman Law Featured in Inc. Magazine - Fastest Growing Law Firm in California