619-795-8000Southern California Tax Audit Defense Attorneys
Defend Your Finances with Comprehensive Tax Audit Defense
Facing an IRS audit is a daunting experience. Having a skilled tax attorney who negotiates with IRS agents daily and can identify sensitive items and issues on tax returns could not be more critical. Our tax audit defense lawyer can also help prevent errors during an audit. Never fight an IRS audit alone.
An IRS audit or examination can be a very daunting experience for a taxpayer. In an IRS audit, the taxpayer has the burden of substantiating (proving) income, deductions, and credits on a tax return. For this reason, IRS tax audits tend to be very complicated, stressful, and sensitive.
What Is an IRS Tax Audit?
An IRS audit is a review of a taxpayer’s financial accounts and information for a given year to determine whether the tax return is reported correctly and accurately. An IRS tax audit may be conducted by mail (correspondence audit), at the office of the taxing agency (desk audit), or at the taxpayer’s home, place of business, or office of the accountant or attorney (field audit).
While taxpayers may prefer correspondence audits or desk audits, the IRS chooses the type of audit you will face. If the IRS selects a field audit, Dallo Law Group will ensure the audit is conducted only at our offices to eliminate interaction between you and the auditor and minimize the stress and burden that naturally accompany the audit process.
Why Was I Selected for an IRS Audit?
There are many reasons why the IRS or another taxing agency may decide to select you for an audit. The IRS often looks for “red flags” on your tax returns. There are numerous “red flags” that can trigger an IRS audit, such as unusual or high deductions taken on your tax return, a big change in income between tax years, estimated income, and deductions, among others. A tax return (Form 1040) can be selected for audit by “document matching.” IRS computers will match what you report on your tax return against the forms filed by people you interact with and do business with (Forms 1099, W-2, 1098, etc.). If the amounts reported on those forms do not match those reported on the tax returns, an audit may result.
Tips from informants can also trigger IRS audits. This information can come from individuals, newspapers, or public records. Sometimes, a tax return could be singled out for special attention because the IRS is investigating certain transactions that are a “red flag” for the IRS. In many cases, the mere “failure to file” a tax return will trigger an IRS audit. An IRS tax audit triggered by the failure to file a tax return can lead to undesirable results for the taxpayer. The auditor may create a tax return for the taxpayer (known as a substitute for return). SFRs can produce an assessment based on third-party information that may not reflect the taxpayer’s claimed deductions or credits, often resulting in a higher tax. If you are delinquent in filing your tax returns, contact Dallo Law Group today for assistance in preparing and filing your tax returns.
What Happens If I Ignore the Notice of Audit?
A taxpayer should NEVER ignore any notices sent by the IRS or other tax agencies, especially not a notice of IRS audit. Ignoring notices can lead to disastrous results for the taxpayer. For instance, the IRS or a state taxing agency often issues a notice of proposed assessment with an arbitrary proposed increase in tax liability, and ultimately a notice of deficiency (90-Day Letter) (90 days from the date on the notice; 150 days if the notice was mailed to a U.S. address outside the United States). Failure to timely respond to the notice of deficiency will lead to an arbitrary tax assessment against the taxpayer. The IRS may soon thereafter initiate collection activities. If you have received a notice of audit from the IRS, contact Dallo Law Group or another experienced tax attorney today to represent you in the audit.
What Happens During an Audit?
During the audit, the IRS will attempt to contact the taxpayer either by telephone or by issuing an IDR (Informational Document Request) by fax or email. Many taxpayers mistakenly believe they are required to answer every question and provide every document requested by the IRS. That’s not necessarily true; you are not required to produce material protected by valid privileges (e.g., attorney-client, work product), but broad or vague objections alone are not sufficient, IDRs are enforceable, and failure to comply can lead to subpoenas, penalties, or court enforcement. An experienced tax attorney can assert appropriate privileges and negotiate reasonable scopes and deadlines. Several instances exist in which the production of the documents or answers to the questions is privileged, including but not limited to testimonial privilege, spousal privilege, confidential marital communication privilege, attorney-client privilege, and work-product privilege.
It is important to note that a taxpayer may not simply refuse to respond to the IDR’s of the IRS on the grounds that the taxpayer may not be privileged from producing this information. The failure to respond to an IDR may result in the issuance of a subpoena for records by the court, and if the taxpayer continues to refuse to respond, it can result in civil and criminal penalties.
Contact Dallo Law Group today to protect your rights and obtain qualified and competent legal representation during your audit.
What Are the Possible Results in an Audit?
An audit can lead to either a “change” or “no change” in the tax liability of the taxpayer for a specific tax year. If the audit results in a “change” to the tax return, the taxpayer has the right to appeal the decision to the administrative appeals division of the IRS. If the taxpayer is unable to resolve the dispute at the audit or appeals level, the IRS will issue a notice of deficiency, in which case the taxpayer has 90 days to file a petition in the United States Tax Court for re-determination of the tax liability (90 days from the date on the notice, 150 days if mailed to an address outside the US).
What Happens After the Audit?
After the IRS issues a notice of deficiency, the taxpayer has 90 days (90 days from the date on the notice; 150 days if the notice was mailed to a U.S. address outside the United States). to file the petition with the United States Tax Court (unless the notice of deficiency was addressed to a taxpayer outside of the United States, in which case the taxpayer has 150 days to file the petition). It is critically important that the petition is filed within the 90 days (90 days from the date on the notice; 150 days if the notice was mailed to a U.S. address outside the United States). If the taxpayer wishes to dispute the tax deficiency. If the deadline is missed, the IRS will automatically assess the tax against the taxpayer. The IRS will then issue a lien against the taxpayer’s property and may commence collection activities (levies and garnishments) against the taxpayer. Furthermore, additional “failure to pay” penalties may accrue. Contact Dallo Law Group today to assist you in the audit process and the post-audit procedures.
What a San Diego Tax Audit Lawyer Can Do for You During an Audit
A San Diego tax audit lawyer can provide valuable representation and assistance throughout the audit process, including audit representation, negotiation, and legal defense in court.
Audit Representation
A tax lawyer can advise you on your rights and obligations during the audit. They can also assist you in gathering and organizing required financial and tax documents. Additionally, they can communicate with the taxing agencies on your behalf. Finally, a tax lawyer can develop strategies to contest any erroneous or unfair audit findings.
Negotiation
A tax lawyer can negotiate with the taxing agencies on your behalf to resolve disputes regarding tax assessments, interest, and/or penalties. Additionally, they may help you to explore settlement options such as installment agreements, offers to settle the debt at a reduced amount, or penalty abatement requests.
Legal Defense in Court
Not all tax audits end up in tax court. Many audits are resolved at the administrative level between taxpayers and tax authorities. In cases where a resolution cannot be reached at the administrative level or where the taxpayer wants to contest the findings in court, the audit may end up in tax court. Representation by a skilled tax lawyer can be critical to obtaining a successful result. A tax lawyer may defend you by filing the appropriate petitions and legal documents, conducting legal research to build a strong defense, presenting arguments and evidence, cross-examining witnesses, negotiating settlements, and providing guidance and strategies throughout the legal process.
Why Should I Hire Dallo Law Group to Represent Me in an Audit?
Fortunately, there is no reason for you to handle your IRS audit alone. At Dallo Law Group, our tax lawyers are experienced and trained in the IRS audit process and know how to negotiate with the IRS and other taxing agencies on your behalf. Because we are also CPA trained, we know how to navigate through your tax return to substantiate your income, deductions, and credits.
For over a decade, Dallo Law Group has represented many individuals and small businesses to achieve successful results from their IRS audits. One such example was when one of our clients faced an IRS bill of over $47,000. After exhausting their efforts and getting no relief from the IRS, they sought our assistance. We were able to hold off the IRS collections process and immediately began working on a resolution with the IRS.
One of the client’s primary concerns was to protect their 401 (k) balance, which we were able to protect, and which was untouched by the IRS’s collection actions. Additionally, we negotiated on the taxpayers’ behalf and had their balance reduced to just $2,278.
In navigating the audit process, experience and education are crucial. Michael Dallo is skilled at dealing with and negotiating with the IRS and other taxing authorities and has achieved superb results for his clients in audits. Contact Dallo Law Group for a case evaluation to discuss how we will put our 10 years plus tax experience to work for you!
How Can I Find Useful Information and Help with the Audit Process Online?
Please visit our Tax Blog Page and read our “Tax Audit Survival Guide” for more tips and assistance with your IRS tax audit.
Frequently Asked Questions (FAQs) About Tax Audits
Facing a tax audit by the IRS or a California state agency, such as the Franchise Tax Board (FTB), can be intimidating and stressful. Our experienced Southern California tax audit defense attorneys have compiled a list of frequently asked questions to help you understand the process and your rights.
How will I be notified of an audit? Is a phone call legitimate?
The IRS and state taxing agencies will always initiate a tax audit by mail. The notice will detail the tax years and specific issues being examined. If you receive an unexpected phone call or an email demanding immediate payment or threatening legal action regarding an audit, it is likely a scam. Never provide personal information or payment details over the phone in response to an unverified contact.
What if I don’t have all the requested records or documents?
You are required to maintain records to substantiate the figures on your tax return. The burden of proof in an audit lies with the taxpayer. If the documents you need are missing, your attorney may work with the agency to determine if alternative forms of documentation are acceptable or request a reasonable extension of time to gather the necessary information. Your attorney may help you reconstruct records from banking statements or third-party sources.
If the necessary documentation is completely unavailable, your tax lawyer can develop a legal strategy to defend your filing position and potentially negotiate for a more favorable resolution.
How long does the audit process take?
The duration of a tax audit can vary widely, depending on the type of audit, the complexity of the issues, and the responsiveness of both the auditing agency and the taxpayer’s representative. While a simple correspondence audit may take a few months, a complex field audit involving multiple tax years can take more than a year to complete. We focus on handling proceedings efficiently to achieve a timely, favorable resolution.
What are the penalties and interest if the audit results in an assessment?
If an audit concludes that you owe additional tax, you will be assessed interest that accrues from the original due date of the tax. Penalties may also apply for issues such as failure to file, late payment, or substantial understatement of income. Your tax attorney can argue for penalty abatement to have the penalties reduced or eliminated if there was a reasonable cause for the error.
Can a tax auditor widen the scope of the audit?
Yes, auditors often have the authority to expand the scope of review, making legal representation crucial. An auditor who finds significant or recurrent errors in the years being examined initially can formally propose expanding the audit to include earlier or later tax years. An auditor can also broaden the focus of the audit beyond the issues initially listed in the notice if any red flags are uncovered. Our skilled audit defense attorneys can proactively manage the relationship with the auditor and control the flow of information to help prevent the audit from expanding unnecessarily.
What is the first step after receiving an audit notice?
Your first step is to contact a tax audit defense attorney immediately. Do not contact the auditing agency directly, and do not send any documents without legal review. (Note: Provide routine, non-privileged documents as instructed, but consult counsel before producing privileged communications or before making substantive statements.) Our experienced tax attorneys at Dallo Law Group can review the notice, determine the best strategy, and take over all communication with the agency, ensuring your rights are protected from the outset. Contact our firm for a case evaluation at 619-912-0616.
How can I verify that an IRS contact is real and not a scam?
The IRS almost always begins an audit or examination by sending an official letter by mail. If you receive a phone call, text, or email demanding immediate payment or requesting personal information, it is likely a scam. The IRS will not:
- Initiate contact by phone, text, social media, or email
- Demand payment using gift cards, wire transfers, or prepaid debit cards
- Threaten arrest or immigration consequences
- Ask for bank information or credit card details over the phone
To verify any IRS contact, you can:
- Ask for the employee’s name, badge number, and callback number
- Compare the information with the IRS’s official “How to Know It’s Really the IRS” guidance
- Contact a tax attorney before responding
Our attorneys can verify the authenticity of any IRS communication and ensure you do not disclose information to scammers.