August 11, 2023
When most people think about the IRS, their mind often jumps to tax audits. It’s an understandable connection to make, as IRS tax audits can be some of the most stressful situations individuals and businesses face. Whether it’s your first time dealing with an audit or you’ve experienced this process before, knowing what to expect and how to prepare is key to successfully navigating an audit.
An IRS tax audit is an examination of an individual’s or corporation’s tax return to verify that income and deductions are accurate. There are three main types of IRS audits: correspondence audits, office audits, and field audits. Correspondence audits are the most common and involve the IRS sending a letter asking for additional information about specific items on a tax return. Office audits require the taxpayer to bring specific documents to an IRS office for review. Field audits are the most comprehensive and involve an IRS agent visiting the taxpayer’s home or place of business.
One of the first things you should do when you receive notice of an IRS tax audit is to review the letter carefully and understand what the IRS is asking for. The letter will typically outline the specific items on your tax return that are being questioned and list the documents you need to provide. It’s important to respond to the audit notice in a timely manner and to gather all necessary documents before meeting with the IRS.
When preparing for an IRS tax audit, it’s crucial to have all your tax documents organized and ready to go. This includes receipts, bills, canceled checks, legal papers, and any other documents that can support your case. Having an organized and complete set of documents will not only make the audit process smoother but will also strengthen your case against any potential discrepancies found by the IRS.
It’s also important to remember that you have rights during an IRS tax audit. The IRS has to treat you with fairness and respect, and you have the right to know why the IRS is asking for specific information. You also have the right to representation during an audit, which can be a crucial resource for those facing a complex tax situation. This is where a tax lawyer can be invaluable. A Jacksonville, FL tax lawyer can provide the expertise and support needed to navigate the complexities of an IRS tax audit.
No matter what type of IRS tax audit you are facing, the key is to remain calm and prepared. The IRS is simply trying to ensure that all tax laws are being followed correctly, and in many cases, an audit can be resolved without any penalties or additional tax owed. However, if you do find yourself facing a situation where you disagree with the IRS’s findings, it’s important to know that you have the option to appeal the decision.
At Crepeau Mourges, we have a team of experienced tax lawyers who can help guide you through the process of an IRS tax audit. We understand how stressful and overwhelming these situations can be, and we’re here to provide the support and expertise you need to successfully navigate the audit and protect your rights. Let us handle the complex tax laws and IRS procedures while you focus on what matters most. So, let’s work together to ensure that your audit experience is as smooth and stress-free as possible. Contact us today to learn more about how we can help you.
July 21, 2023
IRS’ CDP Appeal Program
We are pleased to feature this guest post from our colleagues at Mankus & Marchan, Ltd. discussing the intricacies of the appeal program, the appeal office, and tax court issues. © Copyright reserved.
In 1998, Congress passed the IRS Restructuring and Reform Act (“R&RA”). This act provided, among other things, that the IRS must issue a final notice and demand for payment (by certified mail) to a taxpayer (business or individual) with unpaid tax liabilities before it can take enforcement action to collect the tax balance due. The R&RA also required this notice to state that the taxpayer has a right to a collection due process (“CDP”) hearing with an IRS’ Appeals officer if he/she/it files such an appeal within 30 days from the date of such a final demand.
This portion of the R&RA was incorporated into IRC §6330 and gave the taxpayer the right to a hearing before an independent appeals officer of the IRS in order to dispute the tax liability and/or to propose alternative ways to settle it through other means, such as an offer in compromise (“OIC”), for example. Under IRC§7122, an OIC allows the IRS to settle the taxpayer’s liability for less than the full amount due, depending on the taxpayer’s financial wherewithal and other relevant circumstances.
One purpose of IRC§6330 was to protect the taxpayer from an overzealous collection agent of the IRS and to provide the taxpayer with another chance to work out the tax liability before an allegedly impartial (and less zealous) employee of the IRS’ Appeals office. In the 25 years since the enactment of this statute, it’s not clear to this practitioner that the intended purpose of this statute has fully achieved its aspirational goals.
While it is true that R&RA gave taxpayers additional due process rights, including jurisdiction to petition the U.S. Tax Court for a hearing before a Judge, in practice it still continues to have procedural problems. Below is a list of some of the procedural problems I have encountered in the last twenty five years.
Employees of the IRS Appeals Office
- The employees who handle the CDP appeals for the IRS Appeals office are known as “Settlement Officers” (“S/Os”). S/Os are often former employees of the Collection Division of the IRS, known as “Revenue Officers” (“R/Os”). As R/Os, they have been trained to collect delinquent taxes and have been doing so for a number of years. They have reached Grade 12, the highest grade for regular R/Os, before they are promoted to Grade 13 S/Os. Therefore, they often have an imbued collection mentality and find it hard to be objective and independent, as required by IRC§6330. The S/Os are often skeptical about taxpayers who have unpaid tax liabilities and have the mentality that “I pay my taxes and believe that everyone else should, too.” Alternatively, they justify their attitude with the statement that “settling with a taxpayer for less than the full amount due is not fair to the other taxpayers who pay their taxes in full.” These S/Os are sometimes less inclined to take special circumstances of the taxpayer into account, such as age, or health issues, for example. They are also less inclined to give the taxpayer a second chance after a business failure, or after an acrimonious and difficult divorce, for example. Consequently, some S/Os pay only lip service to being an independent arbiter between the IRS Collection Division and the taxpayer, as required by IRC§6330, as well as IRS’ numerous regulations.
- Under IRS regulations and policy guidelines, the S/O must act as an independent arbiters between the taxpayer and the R/O. The R/Os are usually the ones who initially determined the financial wherewithal of the taxpayer to pay the taxes due, also known as the “collection potential.” If the R/O reject the taxpayer’s offer of settlement through an OIC, for example, the S/O must review the file and determine if the R/O made the proper decision under the IRS’ procedures and guidelines. This requires the S/O to re-review the detailed financial documents and information submitted by the taxpayer to the R/O. On the surface, this sounds fairly straightforward; in practice, however, it’s much more complex.
- Due to the budget cuts imposed on IRS by Congress over the past ten years, the IRS has been obligated to make staffing cuts and has shrunk from about 120,000 employees nationwide ten years ago to about 80,000, through 2021. This has resulted in increased workloads for the employees, including for the S/Os of the Appeals office. The S/Os have less time to devote to each taxpayer’s situation. In cases involving taxpayers with more complex financial pictures, the S/Os often agree with the R/O’s decision and just say no to the taxpayer’s proposal for settlement with the IRS through an OIC – not because that is the correct decision under IRS regulations, but because they would rather deny the request than be second-guessed by a manager for accepting less than the “collection potential.” Worst yet, to be put under a cloud of suspicion by the Treasury Inspector General for Tax Administration (“TIGTA”) for maybe showing favoritism to a particular taxpayer.
- Another problem presented by the budget and staffing cuts is the increased delays in handling the IRS’ workloads. Once the taxpayer submits an OIC, it may take months for IRS to assign the case to an employee for review. The financial documents submitted with the OIC, such as the taxpayer’s bank statements, for example, become outdated and then require the taxpayer to submit updated information once it is assigned to an IRS employee. If the taxpayer also files a CDP appeal under IRC§6330, there are additional delays before the case is assigned to an S/O.
- Being former R/O’s, however, some S/O’s often feel obligated to review the case de novo, for fear of being blamed by their managers for not doing a thorough financial analysis. Against IRS’ own regulations, the S/Os often require the taxpayers to present even more updated financial documents and information rather than deciding on whether the R/O made the right decision based on the financial documents that had been presented to him/her some months, or years, before. This adds more time and expense to the taxpayer to start all over again with the S/O, with little hope that the S/O is more sympathetic than the R/O who reviewed the case to begin with.
- While the S/Os I’ve dealt with in the past are often overcautious about accepting an OIC for fear of being blamed by their managers for accepting an amount less than the collection potential, most of the managers of the S/Os that I’ve dealt with do not get involved with the details of the case and leave it up to the S/Os to make the final decisions. The managers are usually just as overloaded as the S/Os. Having no practical recourse for a managerial review, the taxpayer is then left with no options if he/she doesn’t agree with the decision of the S/Os, other than to incur additional time and expense to file a petition in the US Tax Court for a judicial review.
US Tax Court Issues
- The US Tax Court is not a panacea, either. It is just as overloaded with cases as IRS itself. Besides an overload of cases, many of the tax court petitions are filed by pro se taxpayers who are not knowledgeable about the rules, regulations and procedures of the tax court. This leaves the judges and IRS Counsel’s attorneys overworked, frustrated and inclined to give short shrift to even meritorious cases.
- IRS attorneys have begun the routine practice of filing motions for summary judgment in many cases and ask the tax court judges to dismiss the cases on grounds that there are no issues of material fact between the taxpayers’ petitions and IRS‘ answers to those petitions. I’ve had at least one of my cases dismissed on summary judgment by a US Tax Court Judge even though there were significant issues of material fact. If you’re concerned this could happen in your case, working with an experienced tax lawyer is wise. Unfortunately, the taxpayer could not afford the fees and the additional delays to file an appeal of this decision to the US District Court. He chose another route that resulted in zero dollars for the IRS, rather than the $200,000.00 that had been ultimately offered with the OIC.
- The IRS attorneys also take the position that the facts in these cases be limited to the documentary file and that no new evidence be admitted by the taxpayer at trial. The documentary file usually is limited to the documents in IRS’ records. One of the problems with this approach, however, is that many of the interactions between the taxpayers and the S/Os, such as the required CDP appeal conference, is conducted verbally and has no documentary record, other than the CDP Determination prepared and issued by the S/O. Not surprisingly, these CDP determinations are biased and present the perspective and point of view of the S/Os.
- Finally, the legal standard of review by the US Tax Court is “abuse of discretion,” which means that the Judge in the US Tax Court will not overturn the decision of the S/O, unless the taxpayer can prove to the Judge that the S/O abused his/her discretion. That is a very difficult standard to overcome.
In conclusion, the positive news is that while the R&RA has not worked as ideally as had been hoped for, IRS has begun to accept many more OICs, compared to its historical record before the passage of the R&RA in 1998. I’ve had a number of OICs accepted by the IRS, usually by more experienced and knowledgeable R/Os and S/Os who used their common sense, in addition to their knowledge of IRS’ procedures and regulation. It also helped that, despite their heavy workload, they possessed good communication skills.
April 27, 2023
Business Litigation Lawyer
When you are a business owner, you need to be as prepared as possible for anything that is thrown at you. As a business owner, you may encounter various legal issues that can be challenging to handle without the help of a lawyer you can trust. Business litigation lawyers specialize in handling legal disputes related to commercial transactions, contracts, partnerships, employment, and intellectual property, among others. Here are some reasons why you may need a lawyer for your business.
How a Lawyer Can Help
Protect your business interests
A lawyer, like a business litigation lawyer from a law firm like Eric Siegel Law, can help you protect your business interests by representing you in court, negotiating settlements, and advising you on legal matters. They have experience dealing with various legal issues that businesses face, such as breach of contract, fraud, and employment disputes.
By having a lawyer on your side, you can ensure that your business is protected from legal risks and potential losses. A lawyer can also help you avoid legal disputes by ensuring that your contracts and agreements are legally binding and enforceable.
Handle complex legal issues
Business litigation can be complex and involve various legal issues that require specialized knowledge and expertise. A lawyer can help you navigate complex legal issues and provide you with legal advice on matters such as intellectual property, regulatory compliance, and business contracts.
Minimize legal risks
Business lawyers can help you minimize legal risks by identifying potential legal issues and providing you with strategies to avoid legal disputes. By having a lawyer review your contracts and agreements, you can ensure that they are legally binding and enforceable.
A lawyer can also provide you with legal advice on compliance with state and federal laws, such as employment and environmental regulations. By being proactive in your legal approach, you can minimize the risk of legal disputes that can be costly and time-consuming.
Resolve disputes efficiently
A lawyer can help you resolve legal disputes efficiently by negotiating settlements or representing you in court. They can help you understand the legal implications of a dispute and provide you with strategies to resolve it effectively.
By having a business litigation lawyer on your side, you can resolve disputes quickly and efficiently, minimizing the impact on your business operations.
Protect your reputation
Business disputes can damage your business reputation and affect your ability to attract new customers and clients. A business litigation lawyer can help you protect your reputation by handling disputes professionally and confidentially. A lawyer can also advise you on the legal implications of your actions and help you avoid actions that can harm your business reputation.
What Should You Do?
As a business owner, you need a business litigation lawyer to protect your business interests, handle complex legal issues, minimize legal risks, resolve disputes efficiently, and protect your reputation. By having a skilled lawyer on your side, you can ensure that your business is legally protected and avoid potential legal risks that can harm your business operations.
Having a lawyer is an essential part of managing a successful business. It can save you time, money, and protect your business from potential legal risks. If you want to avoid legal disputes and ensure your business’s long-term success, consider hiring a local lawyer today.
March 22, 2023
Business succession planning is an essential element of any successful business owner’s long-term strategy. It is the process of developing and implementing a plan for the orderly transfer of ownership and management of a business to the next generation, family members, or key employees. Business succession planning is especially important, where many businesses are family-owned and operated.
Business owners often overlook succession planning, which can be a costly mistake. A well-executed business succession plan provides a variety of benefits, including:
- Continuity: A succession plan helps ensure that your business will continue to operate successfully after your departure. It provides a roadmap for the transfer of knowledge, skills, and expertise from one generation or owner to the next.
- Minimizing Disruption: A well-thought-out succession plan helps minimize the disruption that can occur when a business owner retires or passes away. With a clear plan in place, the transition of ownership and management can be seamless, allowing the business to continue operating smoothly.
- Reducing Taxes: Business succession planning can help minimize the tax burden associated with the transfer of assets from one generation to the next. Careful planning can reduce or eliminate estate taxes, capital gains taxes, and other taxes associated with the transfer of ownership.
- Protecting Assets: Business succession planning can help protect the assets of the business and the owners. A well-crafted plan can help minimize the risk of litigation, protect intellectual property, and ensure that assets are transferred in a manner that is consistent with the owner’s wishes.
- Preserving Family Harmony: Family-owned businesses often face unique challenges when it comes to succession planning. A well-developed plan can help preserve family harmony by providing a clear roadmap for the transfer of ownership and management. Developing a Business Succession Plan
Developing a successful business succession plan requires careful consideration of a variety of factors. Some of the key steps in the process include:
- Identifying Potential Successors: The first step in developing a business succession plan is to identify potential successors. This may include family members, key employees, or outside buyers.
- Developing a Timeline: Once potential successors have been identified, it is important to develop a timeline for the transfer of ownership and management. This timeline should be flexible enough to accommodate unexpected events but structured enough to ensure that the transition is smooth.
- Valuing the Business: Valuing the business is a critical step in the succession planning process. A professional valuation can help ensure that the business is transferred at a fair price and that all parties are satisfied with the transaction.
- Structuring the Transaction: Once the business has been valued, it is important to structure the transaction in a manner that is tax-efficient and consistent with the owner’s wishes. This may involve the use of trusts, buy-sell agreements, or other legal structures.
- Communicating the Plan: Communication is key to the success of any business succession plan. All parties involved should be informed of the plan and their roles in the transition process.
Working with a Business Succession Planning Attorney
Working with a business succession planning attorney can help ensure that your plan is effective and legally compliant. If you are a business owner, it is important to work with an experienced attorney from Silverman Law Office, PLLC, to develop a plan that meets your specific needs and goals. With the right plan in place, you can ensure that your business will continue to thrive for generations to come.
February 27, 2023
The best business advice anyone can give business owners is to get everything in writing and get it in a contract if possible. However, what happens when that contract is broken regardless of the original agreement around it? According to a commercial litigation lawyer from Brown Kiely, LLP, what happens next depends on just how the contract was broken:
Mutually Beneficial Breach of Contract
If both parties agree that they wish to break the contract, then that is all it takes. Of course, you will want to get this in writing from both parties and have them sign it. Things happen and times change. Mutually agreeing to step away from a contract happens more often than you might assume. It is one of the better legal outcomes that a business can expect when discussing breaches of contract.
This is when you do not receive what was agreed upon by a certain date. For example, if a company promises to clean your company’s building on a Monday but they show up on Tuesday, then this is a minor breach of contract. As the name suggests, these are small infractions of a contract that may not always make it to court because they are so minor.
This is when you receive something different than what was included in the original agreement. For example, your fashion company ordered one hundred cotton t-shirts but actually received one hundred polyester shirts. If the company you ordered from does not rectify the mistake, then they can be taken to court to either pay up or hand over the goods that were promised.
This is when the other side refuses to carry out the contract. If this costs your company money, then it can go to court. However, if someone signs a contract to work as your employee and then they never show up, that type of breach will not normally hold up unless there are extenuating circumstances.
This is when the other side announces ahead of time that they will not be participating in the contract. Again, if this hurts your company particularly financially, then this case can be taken to court.
The trick with contracts is to prove they are legally binding. While an oral contract is binding to an extent, it must be proven that someone said exactly what they said in order for it to hold up in court. In other words a video would be needed or several eye witnesses would be needed to prove that it was valid. However, if oral contracts are involved, there are certain dollar amounts and time limits on how much these contracts can be enforced for.
As for the other kinds of contracts, the court only awards money based on the amount of the contract. If you lost money because of the breach of contract, you will need to be able to prove that in a court of law and show that it was extremely damaging to the life of your company. Otherwise the courts will look to award you the amount for the contract itself. If you are facing contract issues and are in need of help, contact a lawyer near you immediately.