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If I Amend My Taxes Am I More Likely to Get Audited?

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Filing an amended return does not automatically trigger an audit. The IRS does not have a policy of opening examinations because a taxpayer corrected their return. But an amended return draws additional review, and there are situations where it creates more risk than it resolves.

The amended return process involves Form 1040-X, which the IRS processes manually. An examiner at the service center reviews it to verify that the change is mathematically consistent and that any refund claim is facially valid. That review is not an audit. In most cases the IRS accepts the amendment, processes the change, and the return goes into the normal audit selection pool.

Where it gets more complicated: if your original return was already under examination when you file the amendment, the IRS can incorporate the 1040-X into the open audit. Auditors are allowed to expand the scope of an exam to include any issue raised by the amended return. If you are amending to claim a large deduction that was not on the original return, and the IRS already has questions about your Schedule C, the amendment could invite scrutiny you would have avoided by leaving the return alone. This is the scenario where the decision to amend needs to be made carefully.

On the other side: there are situations where not amending is riskier than amending. If you omitted income, claimed a credit you did not qualify for, or made a significant error in your favor, correcting the record proactively is usually the right move. The IRS’s automated matching system catches income mismatches routinely — if a 1099 was filed with the IRS and not reported on your return, getting ahead of it by amending is generally better than receiving a CP2000 notice and responding reactively.

The three-year statute of limitations for audits runs from the original due date or the date you filed, whichever is later. An amended return does not reset that statute in most cases. One exception: if the amended return claims a refund within 60 days before the statute expires, the IRS has 60 additional days to initiate an audit from that date.

If you are uncertain whether to amend, or if you already have an open exam, book a free 15-minute call or call (619) 378-3138.

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

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Key Takeaways

  • 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.
  • 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.


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.

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

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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

Key Takeaways

  • 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.
  • the Franchise Tax Board for example, the Franchise Tax Board is the California administrative tax agency that governs income tax. So the Franchise Tax Board has a collections manual but it’s nowhere near as in-depth or as detailed as the Internal Revenue.
  • So when we do a state payment plan, they’re generally pretty quick. You know it’s get us documents within a week or get us documents within a few days turnaround and a decision very quickly and there’s usually a lot of pressure that goes along with that.

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How Does Financial Analysis Work for Collections Cases in California?

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When the FTB or EDD is deciding how much you can pay, they run a financial analysis — a structured review of your income, expenses, and assets to determine your ability to pay. This is not a general negotiation. It is a formulaic process, and the outcome depends heavily on how you document and present your financial picture.

Both agencies use collection financial standards that cap how much of your living expenses count in their favor. The FTB generally follows IRS Collection Financial Standards for housing, food, transportation, and other necessary living expenses — though they apply them under California’s own procedures. The basic structure is the same: take your gross monthly income, subtract allowable expenses using the published standards, and the remainder is your monthly ability to pay. That number drives everything.

There are two common outcomes from this analysis. The first is an installment agreement — a formal payment plan based on what the financial analysis says you can pay each month. If your ability to pay covers the full balance within the statutory collection period, you will be expected to pay it. If it does not, the second outcome becomes relevant: currently not collectible (CNC) status, sometimes called hardship status. CNC means the agency agrees that collection activity is currently unproductive because your allowable expenses equal or exceed your income. They do not forgive the debt — they suspend active collection and revisit periodically.

Assets matter as much as income. If you have equity in real estate, significant retirement accounts, or business assets, the agency will factor those into the analysis even if your current income is low. The FTB, like the IRS, can require you to liquidate assets before they will consider CNC status. This is where the analysis gets complicated, because the valuation of assets — especially partial interests in a business, encumbered real estate, or retirement funds with early withdrawal penalties — is genuinely contested territory.

The financial analysis is conducted using Form 3840 (FTB collection information statement) or the federal equivalents (Form 433-A or 433-B for the IRS). The numbers you put on those forms need to be accurate and supportable. Failing to claim legitimate expenses — because you did not know what the standards allow — means the agency calculates a higher ability to pay than is accurate.

If you want to understand what a realistic installment agreement looks like — or whether you qualify for CNC status — book a free 15-minute call or call us at (619) 378-3138.

What Is a Tax Lien?

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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.

Key Takeaways

  • 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.
  • So anybody who’s applying for a government job or anything with security clearance or anything like that will have an issue with the lien.

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

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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.

Key Takeaways

  • 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.
  • I will have somebody reach out to you” and go from there. The agent won’t take any offense to that. Some of them may strong-arm you, some of them may say well you don’t need an attorney, I have a personal matter to discuss with you. Don’t listen to it.

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

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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.

Key Takeaways

  • Topic: My Corporation Has Been Suspended by the State of California What Do I Do?
  • Read the full article below for complete details on this topic.

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Will California Grant Me Innocent Spouse Relief?

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California does have its own innocent spouse relief program, and it is separate from the federal one. Getting relief from the IRS does not automatically mean California will grant it. The California Franchise Tax Board administers its own program under Revenue and Taxation Code § 18533, and in practice the FTB is harder to convince than the IRS.

The federal program under IRC § 6015 gives you three routes: traditional innocent spouse relief, separation of liability, and equitable relief. California mirrors this structure but applies it independently. The FTB will not simply defer to an IRS innocent spouse determination — they conduct their own analysis, look at your California-specific tax situation, and make their own call. If the IRS granted you relief but California did not, you can still owe the FTB even though the underlying tax debt that caused the problem has been resolved at the federal level.

The core question in any innocent spouse case is the same regardless of jurisdiction: did you know or have reason to know about the understatement of tax at the time you signed the return? For traditional relief, you need to show you did not know and had no reason to know. Separation of liability, which allocates the understatement between spouses, is only available if you are divorced, legally separated, or have lived apart from your spouse for at least 12 months. Equitable relief is the catch-all for situations where neither traditional relief nor separation of liability applies — it requires showing that it would be inequitable to hold you responsible given all the facts and circumstances.

The FTB tends to scrutinize the “reason to know” standard closely. If you had access to financial records, managed household finances, or signed returns that reported income from a business you participated in, the FTB may conclude you had reason to know even if you did not actually review the return in detail. They also look at whether you benefited from the underreported income — whether it supported the lifestyle you were living at the time.

California community property law is a separate wrinkle. The default rule under community property is that both spouses are liable for all community income regardless of who earned it. Innocent spouse relief is an exception to that rule, and exceptions are construed narrowly. The time to request relief with the FTB is not after the collection process is fully underway — the FTB will generally not accept a claim after a final tax assessment has been paid in full.

If you were the non-earning or lower-earning spouse in a marriage where the other spouse’s business or investment activity created a tax problem, book a free 15-minute call or call (619) 378-3138. We handle innocent spouse relief at both the federal and California levels.

What Is a Dual Determination?

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Key Takeaways

  • 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 p…
  • 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.

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

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How Do Sales Tax Audits Work in California?

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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. 

Key Takeaways

  • 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 q…

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