What Are the Types of Penalties That I Could Face in the Audit?

So the penalty structure in an audit is really rangy and it can range anywhere from a five percent penalty all the way up to a seventy five percent penalty depending on the conduct and the course of dealing during the audit and how the material is presented. The most common penalty is the negligence penalty which is about 20 percent. If at all possible you want to avoid that negligence penalty and knock this thing down to an accuracy penalty which is about 10 percent. An accuracy penalty is usually the best case scenario because the accuracy penalty is mandatory for adjustments that are $5,000 or more in tax. Generally speaking with most of our clients, although we try and get them out with flying colors, there’s usually some reason that the IRS has audited another return. So a $5,000 adjustment is usually not out of the ordinary; however, we’ll do everything that we can during the course of the audit to mitigate any penalties. For more serious cases, the goal in the audit is to mitigate the civil fraud penalty which is a 75% penalty. In addition to the 75% penalty on top of the tax that you owe, civil fraud prevents certain resolutions within IRS collections. That’s why it’s really important to avoid the stigma of fraud going forward in your IRS matter.

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What Does the IRS Appeals Process Look Like?

So IRS appeals is supposed to be an independent body that is neutral and that’s designed to resolve disputes with the IRS prior to going to tax collections. In reality Appeals is staffed with a bunch of former auditors and a bunch of former collection agents however we’ve had a lot of positive experiences in the course of Appeals in this firm so I like dealing with appeals. I find the appeals process is generally fair and impartial and generally yields a pretty good result depending on the circumstances. Now the good news with appeals is that the auditor is not involved in the process at all. The auditor has taken

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The Complete Guide to IRS Audits

What Is an IRS Audit?

It is every small business owner’s worst nightmare … they have been notified by the IRS that they are going to be audited. IRS audits have a lot of bad connotations, but on a very basic level, an IRS audit is the IRS coming in and checking that your tax return was filed correctly.

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How a Tax Attorney Can Help with Your Tax Lien

how a tax attorney can help with your tax lien

Our last few posts have been about how the various California state tax agencies handle tax liens.

A brief review:

  • The Board of Equalization (BOE) administers the sales and use tax.
  • The Franchise Tax Board (FTB) administers and enforces the individual and corporate state income tax laws and property taxes.
  • The Employee Development Department (EDD) administers payroll tax and unemployment and disability insurance for the state.

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Everything You Need to Know About Tax Liens, Pt. 2

everything you need to know about tax liens 2.jpg

In Part 1, you learned what a lien is, how taxpayers are notified of a lien, and what elements are required for a valid lien. In Part 2, you will read how a lien can impact your credit report, who has access to a list of those with liens, and what happens during bankruptcy and other financial events if a lien is involved.

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What is the Taxpayer Advocate?

The Taxpayer Advocate helps taxpayers resolve problems with the IRS. The Taxpayer Advocate also recommends changes to help prevent problems in the future. The advocate handles those tax problems that are causing significant financial difficulty; when you or your business are facing immediate, adverse threat; and when you have tried to contact the IRS repeatedly to no avail. The Taxpayer Advocate is a member of the Taxpayer Advocate Service (TAS).

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