Practice Areas

California Sales Tax Audit – Board of Equalization Tax Audit

State of California through the Board of Equalization (BOE) has started an expanded program to select many small to medium size businesses for sales tax audit. Our experiences with the BOE evidenced that the government has become even more aggressive in recent years in assessing and collecting sales taxes. In California, the BOE has conducted […]


State Tax Problems-Franchise Tax Board, Sales Tax, Employment Tax

We are a California base law firm and can assist any taxpayer that has tax issues with the California Franchise Tax Board, Employment Development Department, Board of Equalization, and County or City Tax Departments located within California.   California Tax Collection Statute Begins to Give Relief to Some Taxpayers I commented extensively in our past […]


Payroll Tax – Trust Fund Taxes

The trust fund taxes may be charged against all persons who are determined by the IRS or taxing agency to be responsible for collecting and paying taxes, and who acted willfully in not doing so. IRS tax office or other tax agency must first provide two essential legal hurdles: “responsible person” and “willful” to pursue […]


Innocent Spouse Factors

Did the IRS increase your taxes based on your spouse’s unreported income or disallowed deductions? Did you signed a return with your spouse and were under the belief that your taxes were paid? Did your spouse forge your signature? Did your spouse make money through gambling or illegal sources? Did you receive little or no […]


Tax Court

If you and the IRS cannot come to an agreement on your tax dispute or tax problem, you are entitled to take your case to the United States Tax Court, the United States Court of Federal Claims, or the United States District Court to properly resolve your case. The litigation is time sensitive and requires […]


IRS Tax Appeals

If you have a problem with IRS tax collection, tax audit or findings issued by the IRS tax office, you may be able to appeal IRS tax findings through IRS Tax Appeals.  This step is usually taken before you are able to proceed to the US Tax Court system. IRS Tax Appeals is supposed to […]


Independent Contractor

You are an Employee: General rule is that anyone who performs services for you is your employee if you can control what will be done and how it will be done. You are an Independent Contractor: General rule is that the payer has the right to control or direct only the result of the work […]


Unfiled Tax Returns

You may be like many other Americans who have not filed their income taxes for several years. Loss of job, health problems, monetary problems and other life events may have caused you to not file your IRS or state tax returns.  If not properly handled, your unfiled tax returns may create IRS tax problems as […]


IRS Tax, Penalties & Interest

Removal of Penalty and Interest Reasonable Cause Circumstances where IRS will remove the penalty charges may include but not limited to: You relied on IRS’ written advice concerning your tax situation which resulted in the penalty. Death or serious health condition suffered by a family member Mental or Physical illness Drug or related dependency problems […]


Factors in Releasing Federal Tax Lien

How to Release IRS TAX LIEN –   Releasing your Tax Lien: IRS may issue a Release filing of the Notice of Federal Tax Lien under certain circumstances: Taxpayer has fully paid the tax due including interest and other additions. Taxpayer has successfully negotiated and paid the lower amount of taxes through an Offer in […]


Tax Bankruptcy

If you have any questions related to discharging taxes in bankruptcy, we believe that there is not firm in Los Angeles with as much experience or knowledge in this area.  We are regularly contacted by other tax attorneys and bankruptcy attorneys to provide advice in this area of law. Our tax professionals have substantial experience […]


Offers In Compromise

Reduce your taxes through a tax settlement program.  Our tax attorneys will review your financial profile and submit an IRS Offer in Compromise that will provide you with the highest chance for acceptance of your IRS tax settlement with the IRS.


Criminal Tax

Criminal investigation on your tax returns or fraudulent tax activity is usually initiated by the Criminal Investigation Division of the IRS. There are substantial legal and financial penalties if you are caught in criminal tax activities. It is very important to take pro-active measures if you believe that there are problems with your tax case.


IRS & Sales Tax Audits

IRS Tax audits can be risky but it is also an opportunity. Be prepared, organize, present your case and protect your rights. The key in dealing with any tax audit is to organize, organize and organize. Start collecting all relevant income and expense records and properly categorize them so that you can argue your side […]


IRS Installment Agreement

It is possible to work out an installment payment arrangement with the IRS if you are behind in your IRS tax payments. You are not required to full pay IRS tax if you are financially unable to do so.  IRS is required to accept certain installment payment plan for IRS tax debt if taxpayer has […]


TAX LEVY – BANK & WAGE LEVIES

IRS and other taxing agencies use tax levies as one of its many tools to collect on taxes which are owed by the taxpayer. It is one of the most powerful tools that the IRS has to collect on its taxes. Unlike other creditors, IRS is given the ultimate power to seize any assets that […]

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Foreign Account Tax Compliance Act (FATCA)

Foreign Account Tax Compliance Act (FATCA) is a global initiative launched by United States Treasury Department to mitigate money laundering and tax evasion by U.S. individuals and entities  holding foreign accounts and many types of financial assets outside of the United States ie. offshore asset reporting.

FATCA requires certain U.S. taxpayers with authority and control over various financial assets outside the United States to report those assets to the IRS on Form 8938, Statement of Specified Foreign Financial Assets.  Severe penalties await for those who do not report foreign assets and attempt to shield their assets from discovery.   FATCA filing requirement should be made in conjunction with reporting foreign financial accounts as required under  Report of Foreign Bank and Financial Accounts (FBAR) – FinCEN Form 114.


Foreign Bank Account Report – FBAR Penalties

Every US citizen and permanent residents will be subject to FBAR penalties. If you have a signatory authority or any financial stake or claim in an account located outside of US Jurisdiction, including a bank account, brokerage account, mutual fund, trust, or other type of foreign financial account, exceeding certain dollar amounts, you may be required to report the account annually to the Department of Treasury – IRS by electronically filing a (FinCEN) 114 Financial Crimes Enforcement Network , Report of Foreign Bank and Financial Accounts (FBAR).


Should you file OVDP or Streamlined

Offshore Voluntary Disclosure Program vs. Streamlined Disclosure process is one of the most asked questions from anyone with unreported foreign bank account.  Stakes are high and your results depend heavily on how your case will be presented.


Helpful Links and Resources

Tax – Internal Revenue Service

Internal Revenue Service – link to www.irs.gov
United States Tax Court www.ustaxcourt.gov
United States Treasury www.ustreasury.gov
Social Security Administration www.ssa.gov
Tax Return Non Filers www.ustreas.gov/irs/ci/tax_fraud/docnonfilers.htm
Fraudulent Returns and Deductions www.ustreas.gov/irs/ci/tax_fraud/docreturnpreparer.htm
Taxpayer’s Rights www.irs.gov/pub/irs?pdf/p1.pdf

Tax – California and Tax Lawyer Information Source

Franchise Tax Board www.ftb.ca.gov
Employment Development Department
State Board of Equalization www.boe.ca.gov
Research California Law www.leginfo.ca.gov/calaw.html
Los Angeles Superior Court www.lasuperiorcourt.org

Bankruptcy

Bankruptcy Lawyers www.bankruptcylawyersgroup.com
Bankruptcy Court www.cacb.uscourts.gov
American Bankruptcy Institute www.abiworld.org
Bankruptcy Code and Rules www4.law.cornell.edu/uscode/11/
Obtain Value of Your Car www.edmunds.com

Estate Planning

Estate Planning Answers www.abanet.org/rppt/public/home.html
Find your answers to estate planning www.findlaw.com/01topics/31probate/index.html


Business Formation

Los Angeles business formation comes down to the following choices:: 1) Sole Proprietorship; 2) Corporation; 3) Limited Liability Company; 4) Limited Partnership; 5) General Partnership; 6) Limited Liability Partnership.

Sole Proprietorship
The sole proprietor enjoys complete control over his/her business. While this type of business owner receives all the profits, he/she also has sole responsibility for all debts and liabilities. Fictitious Business Name Statement may be filed with the County Clerk or County Recorder where the principal place of business is located. Other city or county registration may be required. Income tax returns combine business income and personal income. The biggest disadvantage to a sole proprietorship is the unlimited liability for business debts held by the individual business person. In addition, income tax rate may be higher than the corporate form of business organization.

Corporation

The corporate form is the most permanent form of business. It continues for the life of its charter regardless of what happens to the original organizer or stockholders. The corporation is owned by stockholders in proportion to the number of shares owned by each stockholder. A corporation can be a one person operation with only one stockholder holding all of the stock and being the only officer.
When incorporating, it is possible to qualify the corporation as a small business or
“S- Corporation” versus a “C-Corporation” or regular corporation. For federal income tax purposes, the S-Corporation is taxed the same as a partnership. The income of the S-Corporation passes directly to the stockholders who pay taxes on their shares without any federal income tax being paid by the corporation itself. The C-Corporation pays corporate income tax on its earnings while the stockholders only pay income tax if and when they receive dividends on their stock.

Limited Liability Company

A Limited Liability Company generally offers liability protection similar to that of a corporation but is taxed similar to a partnership. Limited Liability Companies may be managed by one or more managers or one or more members. An operating agreement governing its members and operation of the Limited Liability Company is an essential element of a viable and stable limited liability company.

General Partnership
The general partnership, which is the most common partnership used, must have two or more persons engaged in a business for profit. Except as otherwise provided by law, all partners are liable jointly and severally for all obligations of the partnership unless agreed by the claimant. The partners must claim their share of the profits or losses on their personal returns. Income is taxed only once. Compatibility of the partners is essential.

Limited Partnership
The limited partnership must include at least one or more general partners who participate in management decisions and who have personal responsibility for the partnership debts. There will also be one or more limited partners who do not participate in management and whose liability for partnership debts is limited to the amount they have contributed to the business. Income is taxed only once. The partners must claim their share of the profits or losses on their personal returns.

Limited Liability Partnership
A Limited Liability Partnership is a partnership that engages in certain types of professional services including the practice of law and architecture. The types of professions allowed to be formed as limited liability partnerships may broaden over time. A limited Liability Partnership is required to maintain certain levels of insurance as required by law. Income is taxed only once.


Estate & Tax Planning

A well planned living trust can help you avoid or reduce taxes so that you can leave as much of your assets to your heirs and not to the government.

Should you want to take advantage of estate and tax planning opportunities for you and your family please contact us or your financial advisor to plan for your future and maintain control of your assets.


California Sales Tax Audit – Board of Equalization Tax Audit

State of California through the Board of Equalization (BOE) has started an expanded program to select many small to medium size businesses for sales tax audit.

Our experiences with the BOE evidenced that the government has become even more aggressive in recent years in assessing and collecting sales taxes. In California, the BOE has conducted more than 60,000 audits and collected hundreds of millions of dollars in taxes in recent years.

California sales tax department (BOE) uses various sampling methods in order to determine sales tax liability against the taxpayer.  It is important to engage and actively negotiate with the BOE regarding the various mathematical sampling methods and techniques which may be employed to determine the sale tax debt.


State Tax Problems-Franchise Tax Board, Sales Tax, Employment Tax

We are a California base law firm and can assist any taxpayer that has tax issues with the California Franchise Tax Board, Employment Development Department, Board of Equalization, and County or City Tax Departments located within California.

 

California Tax Collection Statute Begins to Give Relief to Some Taxpayers

I commented extensively in our past seminars regarding the need for creating a clear and certain collection statute for all California tax debts.  By providing clear guidelines and dates for collection of taxes, taxpayers are better able to obtain a fresh start and be released from lifetime of uncertainty with regard to unpaid tax debts.   In that regard, we applaud Assemblywoman Judy Chu in her effort, analysis and persistence in guiding this California tax collection bill through the legislative process.

As of May 2007, California Franchise Tax Board wrote off 373,819 accounts during the period of July 1, 2006, through May 30, 2007, inclusive.  The total dollar amount of taxes which have been essentially eliminated for collections amount to $3,219,766,558 under the State of California’s new tax collection statute which now allows a 20 year statute of limitations for collecting on California State tax debt which was enacted as part of AB 911.

The 20-year statute of limitations on the collection of California tax liabilities, as provided by Revenue and Taxation Code Section 19255, sets the period during which tax may be collected as up to 20 years from the last statutory lien date for each tax year.  This new law does not affect Internal Revenue Service – IRS Tax Collections concerning tax debt owed to IRS or other Federal Agencies.

After the 20 year statute of limitations for tax collection, the tax liability for the tax year is written off and is considered time barred from tax collection procedures including tax levy, bank levy, tax lien by the Franchise Tax Board. Before California enacted the new tax law AB 911, there was no statute of limitations on the collection of tax liabilities and the government was allowed to issue tax levy, tax lien, enforce court enforced collections until the full tax amount was paid..


Payroll Tax – Trust Fund Taxes

The trust fund taxes may be charged against all persons who are determined by the IRS or taxing agency to be responsible for collecting and paying taxes, and who acted willfully in not doing so.

IRS tax office or other tax agency must first provide two essential legal hurdles: “responsible person” and “willful” to pursue an individual for these payroll taxes.

RESPONSIBLE PERSON can be an individual who is an officer or employee of a corporation, a partner or employee of a partnership, an accountant, a volunteer director/trustee, or an employee of a sole proprietorship.

WILLFULLY means acting or not acting voluntarily, consciously, and intentionally. A responsible person may be deemed to be acting willfully if he intentionally decides not to deposit payroll taxes as directed by the owner of the company.

Trust fund or payroll tax problems require extensive review of your tax information and review of your business by a tax attorney to provide meaningful guidance in resolving your tax problem.


Innocent Spouse Factors

Did the IRS increase your taxes based on your spouse’s unreported income or disallowed deductions? Did you signed a return with your spouse and were under the belief that your taxes were paid? Did your spouse forge your signature? Did your spouse make money through gambling or illegal sources? Did you receive little or no benefit from your spouse’s income? Were you separated, divorced or living apart during the tax year? Are you surprised with the demand the IRS is making against you to pay the tax?

If you answered yes to any of the questions listed above, you may qualify for reduction or complete elimination of your taxes under the INNOCENT SPOUSE relief. In addition, you will not be responsible for any penalties and interest which can often be much greater than the taxes owed.


Tax Court

If you and the IRS cannot come to an agreement on your tax dispute or tax problem, you are entitled to take your case to the United States Tax Court, the United States Court of Federal Claims, or the United States District Court to properly resolve your case.

The litigation is time sensitive and requires in depth review and analysis of your tax case.


IRS Tax Appeals

If you have a problem with IRS tax collection, tax audit or findings issued by the IRS tax office, you may be able to appeal IRS tax findings through IRS Tax Appeals.  This step is usually taken before you are able to proceed to the US Tax Court system.

IRS Tax Appeals is supposed to be independent of your local IRS tax office.  You or your representative must be prepared to discuss and argue all disputed issues with the IRS appeals officer and show evidence which may contradict IRS auditor’s findings or which may validate a tax position that you have taken.

In most instances, if agreement is not reached at your IRS tax appeals conference, you may be able to take your case to Tax Court to have a tax court judge review your case.

A timely written protest is required in most cases which sets forth information to support your position.


Independent Contractor

You are an Employee:
General rule is that anyone who performs services for you is your employee if you can control what will be done and how it will be done.

You are an Independent Contractor:
General rule is that the payer has the right to control or direct only the result of the work done by an independent contractor, but not the means and methods of accomplishing the result.

This broad rule has a lot of gray areas which is open to interpretation and there are numerous other factors which the IRS will consider before coming to their determination. Finding the right classification involves detailed analysis of the relationship between the parties focusing on evidence of the degree of control and degree of independence including behavioral control and financial control.


Unfiled Tax Returns

You may be like many other Americans who have not filed their income taxes for several years. Loss of job, health problems, monetary problems and other life events may have caused you to not file your IRS or state tax returns.  If not properly handled, your unfiled tax returns may create IRS tax problems as well as California state tax problems.  It is imperative that taxpayers take initial steps to resolve this tax problem.

If you don’t have any past tax records such as W-2, 1099, 1098, we can obtain historical information on your account from various data bases or reconstruct your account based on other financial information to properly file your returns and bring you into compliance with the IRS so that you can avoid potential criminal charges.

 


IRS Tax, Penalties & Interest

Removal of Penalty and Interest
Reasonable Cause

Circumstances where IRS will remove the penalty charges may include but not limited to:

You relied on IRS’ written advice concerning your tax situation which resulted in the penalty.

Death or serious health condition suffered by a family member
Mental or Physical illness
Drug or related dependency problems
Reliance on a bad accountant or a tax advisor
Extended military service

There are many other factors and circumstances which may allow removal of penalty assessment.  The strength of your argument is enhanced if you are able to provide supporting documentation from third party sources validates your position for removal of irs tax penalty.


Factors in Releasing Federal Tax Lien

How to Release IRS TAX LIEN –

 

Releasing your Tax Lien:
IRS may issue a Release filing of the Notice of Federal Tax Lien under certain circumstances:

  1. Taxpayer has fully paid the tax due including interest and other additions.
  2. Taxpayer has successfully negotiated and paid the lower amount of taxes through an Offer in Compromise.
  3. IRS accepts a bond that the taxpayer submits guaranteeing payment of the debt.
  4. Tax lien releases automatically10 years after a tax is assessed if certain conditions are met.
  5. If you are giving up ownership of property, such as when you sell your home, you may apply for a Certificate of Discharge to release your tax lien.
  6. The notice was filed too soon or not according to IRS procedures.
  7. Withdrawal will speed collecting the tax.
  8. Withdrawal would be in your best interest and in the best interest of the government.
  9. IRS assessed the tax and filed the lien when the taxpayer was in bankruptcy, and subject to the automatic stay during bankruptcy.
  10. IRS made a procedural error in an assessment.
  11. Taxpayer was not given the appropriate opportunity to dispute the assessed liability.


Tax Bankruptcy

If you have any questions related to discharging taxes in bankruptcy, we believe that there is not firm in Los Angeles with as much experience or knowledge in this area.  We are regularly contacted by other tax attorneys and bankruptcy attorneys to provide advice in this area of law.

Our tax professionals have substantial experience in dealing with tax matters in the bankruptcy arena.  We have extensive experience with tax bankruptcy problems having served as professionals with the IRS, tax law firms specializing in tax debt management and tax bankruptcy boutique firm in Los Angeles as well as serving as interns to bankruptcy judge for the United States Bankruptcy Court for Central District of California Los Angeles Bankruptcy Court. Our main Tax Bankruptcy attorney is also the recipient of the  American Jurisprudence Award winner for Bankruptcy Law in Los Angeles.

The first step towards any tax bankruptcy filing requires an in depth review of your tax records and a detailed analysis of your finances which must be done before this option is even considered.


Offers In Compromise

Reduce your taxes through a tax settlement program.  Our tax attorneys will review your financial profile and submit an IRS Offer in Compromise that will provide you with the highest chance for acceptance of your IRS tax settlement with the IRS.


Criminal Tax

Criminal investigation on your tax returns or fraudulent tax activity is usually initiated by the Criminal Investigation Division of the IRS.

There are substantial legal and financial penalties if you are caught in criminal tax activities.

It is very important to take pro-active measures if you believe that there are problems with your tax case.


IRS & Sales Tax Audits

IRS Tax audits can be risky but it is also an opportunity. Be prepared, organize, present your case and protect your rights.

The key in dealing with any tax audit is to organize, organize and organize. Start collecting all relevant income and expense records and properly categorize them so that you can argue your side of the story. If you don’t have the back up records, do the best you can to piece together your position on the income or expense schedules.

We have great record of achieving successful audit representation for our clients. Many of clients have obtained a minimal payment or “no change” status on their audits. No change status means that you owe nothing to the taxing agency. In some cases, we have even obtain tax refunds for our audit clients.


IRS Installment Agreement

It is possible to work out an installment payment arrangement with the IRS if you are behind in your IRS tax payments. You are not required to full pay IRS tax if you are financially unable to do so.  IRS is required to accept certain installment payment plan for IRS tax debt if taxpayer has certain financial problems.


TAX LEVY – BANK & WAGE LEVIES

IRS and other taxing agencies use tax levies as one of its many tools to collect on taxes which are owed by the taxpayer. It is one of the most powerful tools that the IRS has to collect on its taxes. Unlike other creditors, IRS is given the ultimate power to seize any assets that you may have to satisfy taxes which are owed to them without getting a court order.

IRS is authorized to use vast array of data bases to find out where a taxpayer lives, works, banks, holds investment accounts. IRS data bases will allow them to have information on your ownership in land, cars, boats, interest in businesses and any other assets which can be sold or liquidated to satisfy taxes which may be owed.