rs-irs-audits Archives - Page 5 of 9

How Important Is Presentation in an Audit?

May 25, 2026July 16, 2020 by Brotman Law

Key Takeaways

During the course of the audit process, there’s so much time that’s involved in going through and trying to minimize liability.
You’re going through and hopefully actively controlling the scope of the documents.
I can’t tell you how many compliments that we’ve gotten based on the way that we prepare materials and the ease of those materials for the people that we’re dealing with.

During the course of the audit process, there’s so much time that’s involved in going through and trying to minimize liability. You’re going through and hopefully actively controlling the scope of the documents. You’re controlling the scope of the information that’s being presented and so when you get to the point where you’re giving a final presentation or giving a preliminary presentation to an auditor, how that information is presented is critically important. I can’t tell you how many compliments that we’ve gotten based on the way that we prepare materials and the ease of those materials for the people that we’re dealing with. I mean look at this. Man if you were having an audit client and somebody comes in with a nice organized well presented binder and you’re able to sit across from that person during the course of an audit meeting, having a casual conversation with you, you’re flipping through the tabs as I’m talking to you, it just makes things easy. You’re in a good mood and you go back and do your audit report, you’ve got something easy to reference. It just helps. Consequently if I bring you a box of stuff and it’s not organized and you have to dig through it and you can’t find things and you can’t refer to things and pages are missing or whatever, you’re going to get frustrated. So you want to present materials in a way that tells a story. All of the stuff tells the story. We’re going to walk through a sequence. You want your materials to line up to that sequence, so the presentation portion is extremely critical. It can save you a ton of money and it’s very valuable to make sure that your presentation is right going into an audit.

Have a Tax Question or Notice?

If you’re dealing with an IRS audit, collection action, California state tax matter, or any other tax issue, we can review your situation in a free 15-minute consultation.

Schedule a Free Call → Or call: (619) 378-3138

How Do I Beat IRS Examinations at Its Own Game?

May 25, 2026July 16, 2020 by Brotman Law

Key Takeaways

Topic: How Do I Beat IRS Examinations at Its Own Game?
Read the full article below for complete details on this topic.

How Do I Beat IRS Examinations at Its Own Game? So here are some of the tactics that we used when dealing with IRS examinations in order to get the best results for our clients and I’m not necessarily recommending as a layperson that you try and effectuate these strategies by yourself I’m simply letting you know because I want you to see the playing field in terms of how IRS audits actually work and some of the tactical maneuvers that we use to get the best results for our clients again with an IRS audits particularly a field audit you want to make sure that you’re handling the situation with an appropriate amount of deference and usually with field audits you want to get an attorney involved as quickly as possible however here’s the way that we handle the situation number one when dealing with an examination issue we’re trying to be at least a step ahead of the auditor so we’re creating a very defined path and we’re trying to lead the auditor down the path that we want to detect so what this takes is it takes two things number one you need a clear indication on where you’re starting at a point that on so number one what are the facts what documents do I have available to me how are my documents going to line up in accordance with the auditors expectations why is the client being audited what information can I gather about my current situation based on the information I have about my current situation what are the likely outcomes when I get to the end am I gonna pay a tax I know how much tax.

Is Applying for a Tax Amnesty or Going Through a State’s Voluntary Compliance Program a Good Idea?

May 25, 2026July 15, 2020 by Brotman Law

Key Takeaways

So it’s difficult for me to answer that question for everybody because it’s a highly fact-specific question but generally the way that I view state amnesty plans or state voluntary disclosure plans…
The states have created this great deal for themselves.
They’re not going to waive any of the interest or they may waive the interest but basically they don’t have to do anything and they have all these people coming forward and saying we owe tax pay ov…

So it’s difficult for me to answer that question for everybody because it’s a highly fact-specific question but generally the way that I view state amnesty plans or state voluntary disclosure plans is kind of like a sucker’s bet. The states have created this great deal for themselves. They lack enforcement mechanisms to go after a lot of multi-state taxpayers and so what they’ve done is they’ve created a program that if you come forward and you pay all the tax that you owe for let’s call it three years, they’ll be kind enough to waive the penalty portion. They’re not going to waive any of the interest or they may waive the interest but basically they don’t have to do anything and they have all these people coming forward and saying we owe tax pay over the tax. In some cases it’s a great way of mitigating liability, particularly if you have Nexus or minimum contacts in a state that exceed or greatly exceed the disclosure period for the voluntary disclosure. So it’s not like a pocket no, but at the same point it’s not a pocket yes either. It’s all these companies that tend to think that by going through voluntary disclosure and just paying over all this tax it’s the best thing and the problem is from a financial perspective, that may not be the best course of action for the business. You might not want to go through voluntary disclosure. It may not make sense to go through voluntary disclosure, it may not make sense to participate in the amnesty, so before you make that decision, before you jump into “I’m gonna go through voluntary disclosure,” “I’m gonna go through amnesty,” “I’m gonna subject myself to jurisdiction in this particular state,” back up. Look at the landscape of the company, look at all of its sales activity, look at all the places that it potentially is exposed to and then make a plan based on what the best thing for the company is. It’s not a great thing for the company if the company has to pay all these past due sales taxes and state income taxes and go insolvent. You’re not helping anybody so the important thing is build a plan, create that plan and then strategically use voluntary disclosure programs and amnesty programs to accomplish your objectives. That’s the much better way to leverage those and it’s the better way to know if they make sense for your business.

Have a Tax Question or Notice?

If you’re dealing with an IRS audit, collection action, California state tax matter, or any other tax issue, we can review your situation in a free 15-minute consultation.

Schedule a Free Call → Or call: (619) 378-3138

What Is Nexus? Do I Have Nexus in California?

May 25, 2026July 15, 2020 by Brotman Law

Nexus is a legal term and what it means is essentially a code for the level of minimum contacts that you have in a state. Minimum contacts can include:

Key Takeaways

Nexus is a legal term and what it means is essentially a code for the level of minimum contacts that you have in a state.
Third party contacts can be independent contractors or vendors.
These contacts would tend to trigger Nexus in a particular state so if you have that level, you meet the Nexus threshold.

How Is Nexus Created in California?

May 25, 2026July 15, 2020 by Brotman Law

Key Takeaways

How is Nexus created in California?
So there’s a concept called click-through nexus or affiliate nexus.
So those are ways that you trigger nexus with the state of California, and that’s how you would obligate yourself to pay tax.

How is Nexus created in California? Well, Nexus is created in California in a variety of different ways. So the first way is through physical contacts. Physical contacts could be through employees that are in California, independent contractors that are operating on a company’s behalf within California. It could be through third parties.

So vendors or anybody who’s classified as an agent operating within the state of California is sufficient enough to create nexus within California. Then we have a group of criteria called, call them economic contacts. So if you’re doing a certain amount of business in California, if your sales revenue meets an appropriate threshold or you have other economic contacts with California, then you could be triggering nexus within California and obligating yourself to pay tax. And then the third category that I would generally use is what I call internet contacts.

So there’s a concept called click-through nexus or affiliate nexus. And so for businesses that principally operate online, you have to get into trouble that you’re not overly marketing to customers that are located in California by using any one of common internet marketing tools.

So those are ways that you trigger nexus with the state of California, and that’s how you would obligate yourself to pay tax.

Have a Tax Question or Notice?

If you’re dealing with an IRS audit, collection action, California state tax matter, or any other tax issue, we can review your situation in a free 15-minute consultation.

Schedule a Free Call → Or call: (619) 378-3138

What Types of Collection Actions Can California Take Against Me If I Am in Another State?

May 25, 2026July 15, 2020 by Brotman Law

This is a common question we get from prospective clients. I get a lot of clients who are on the East Coast for example and they’re in New York or North Carolina or Florida or any one of those Atlantic states and they say “well I’m all the way over here, I’ve never been to California, I don’t like to travel to California, I don’t plan on going to California so if I owe money in California for state sales tax, for state income tax liability, what can they really do to me?” And the answer to that is they can do a whole lot to you. The reason for that is while you may not have contact with California and you may not step foot in California, probably the people that you do business with or the banking institutions that you use or the third parties that you use have some sort of nexus with California. For example, if you live on the East Coast and you use Bank of America, we have Bank of America branches in California.

Key Takeaways

This is a common question we get from prospective clients.
For example, if you live on the East Coast and you use Bank of America, we have Bank of America branches in California.
California doesn’t need to send a levy notice to liquidate your bank account all the way to Maine – they can just walk into the branch in California or even easier, just fax it over.

What Is Residency? Can I Be a Resident of More Than One State?

May 25, 2026July 15, 2020 by Brotman Law

Key Takeaways

So there’s different concepts to residency but the most common concept is from an individual perspective.
Let’s say you live in one state and you move to another state.
Your residency changes and you know if you pick up and leave California and move to Texas and you never come back to California, no problem.

So there’s different concepts to residency but the most common concept is from an individual perspective. Let’s say you live in one state and you move to another state. Your residency changes and you know if you pick up and leave California and move to Texas and you never come back to California, no problem. The problem is is that people and businesses aren’t usually that simple as a person can have multiple contacts with multiple states. They might travel around, they might live in several different states for a period of time and so residency is really where the tax home is for the taxpayer and what residency really entails is an analysis of what’s called domicile. Domicile is where you plant your flag. It’s where you set up your tax jurisdiction and the way that most state residency rules work is in order to sever residency with the state, you have got to pick up your flag out of that state and plant it in another. There’s a variety of factors that go into this but residency is a very complicated thing because people say “well can I be resident of two states” and yes, from a physical perspective you can be a resident of two states. You can say I live in California and I summer in Colorado or you know whatever it is, but the reality of the situation is with residency is even if you go back and forth between two states, your domicile is in one of those states and one of those states has controlling jurisdiction over you. You can’t have a situation where you have two controlling jurisdictions, so it’s really important from a residency analysis to stop thinking about it from a “where do I live perspective” and start thinking about it from a tax perspective and that’s where a lot of people get into trouble.

If you are facing an FTB residency audit, I handle these cases throughout California. Learn about California residency audit defense →

Have a Tax Question or Notice?

If you’re dealing with an IRS audit, collection action, California state tax matter, or any other tax issue, we can review your situation in a free 15-minute consultation.

Schedule a Free Call → Or call: (619) 378-3138

What Do I Do If There Is a Serious Error on My Return and I Get Audited?

May 25, 2026July 15, 2020 by Brotman Law

So the first thing you need to do if there’s a serious error on your return is to understand what your risk is. Was the error caused willfully? Was it not caused willfully? This is not the time to be an advocate. You need to answer yourself honestly because it’s always important to understand where the truth is in order to find out what your position is and the position you’re going to take in negotiating with the Auditor. If the error was a simple mistake and there’s no criminal liability, then the decision needs to be made on whether or not you’re going to disclose that to the auditor or not. If you don’t disclose it to the auditor and the auditor catches it later, there could be consequences in terms of penalties; however if you get out in front of the issue and disclose it, although you’re on

Key Takeaways

So the first thing you need to do if there’s a serious error on your return is to understand what your risk is. Was the error caused willfully? Was it not caused willfully? This is not the time to be an advocate.
the hook for whatever the taxable adjustment is as a result of the error, you may be able to leverage it to your advantage.

What Is the Criminal Investigation Division of the IRS?

May 25, 2026July 15, 2020 by Brotman Law

Key Takeaways

Well the Criminal Investigative Division is exactly what it sounds like: it is the central investigative body charged with investigating and building cases against people who are charged with tax c…
So Criminal Investigation works with a variety of different agencies to help build up the tax side of a case.
For example, they can work with the FBI they can work with Homeland Security, they can work with a variety of different agencies to help build and prosecute those who cheat on their taxes.

Well the Criminal Investigative Division is exactly what it sounds like: it is the central investigative body charged with investigating and building cases against people who are charged with tax crimes. So Criminal Investigation works with a variety of different agencies to help build up the tax side of a case. For example, they can work with the FBI they can work with Homeland Security, they can work with a variety of different agencies to help build and prosecute those who cheat on their taxes. Now the reality of the situation is that the Criminal Investigation Division is a very small unit but they’re a very focused unit. So the way that the government sends a message to tax criminals is with a very high conviction rate and currently the US Attorney’s Office (when it comes to tax crimes) enjoys a 90 percent conviction rate. That’s pretty staggering and the reason they’re able to enjoy that that big of a conviction rate is because of the work that the Criminal Investigation Division does. Criminal Investigative cases often take a very long time to develop but once they do, they’re very focused. They’ve usually got the people in their sights and they’re very thorough investigations, so that’s what the criminal investigative unit is, that’s what it does and that’s why you should be concerned about when they’re involved in your matter.

Have a Tax Question or Notice?

If you’re dealing with an IRS audit, collection action, California state tax matter, or any other tax issue, we can review your situation in a free 15-minute consultation.

Schedule a Free Call → Or call: (619) 378-3138

What Should I Do If I Believe I Am Under Investigation by the IRS?

May 25, 2026July 15, 2020 by Brotman Law

So if you’re watching this video and you believe that you’re being investigated criminally by the IRS, you probably have a good sense of why you’re being investigated and depending on how certain you are of this, you need to stop right now. You need to call an attorney and you need to retain a criminal tax attorney to help you. The reason for that is criminal investigations are multi-year investigations. They’re very focused, they’re very detail-oriented and the criminal agents that work these cases put in a lot of time. Often when the subject of these investigations or the target of these investigations become aware that a criminal agent is looking into their conduct, it’s already too late because the government is very far along on the case. They’ve started either contacting third party witnesses, they’ve contacted the subject or target directly, or they’ve taken other action to make their presence known. They don’t make their presence known unless they’re pretty far along in their case. In the beginning they go knock on somebody’s door, but know they’re working behind the scenes. They’re looking at tax returns that were filed, they’re looking at other source documents, they’re looking at information, they’re pulling bank records and they’re building a case. Only after they’ve built that case and they’re certain or fairly certain that they’re going to attain a conviction do they go out in the field and start collaborating. So by the time you become aware that a criminal agent is on to you they may be very very far along or you may be almost the point

Key Takeaways

So if you’re watching this video and you believe that you’re being investigated criminally by the IRS, you probably have a good sense of why you’re being investigated and depending on how certain you are of this, you need to stop right now.
where you’re going to get indicted. That’s why it’s important to stop, to get a tax attorney involved, get a criminal tax attorney who knows what they’re doing and to build a strategy to figure out why they’re looking at you and what you can do about it.