Tax return audits by the Federal and State taxing authorities have become much more focused, intrusive and expensive to defend. Federal procedure has become a niche specialty which is not well-understood, and an unrepresented Taxpayer is very vulnerable to having his rights usurped (perhaps even unwittingly) by the taxing authorities.
The Internal Revenue Service is very intent on selecting tax returns for examination that are most likely to yield additional tax revenue. Accordingly, tax returns of high net worth individuals, especially those who are self-employed, are receiving much of their attention. Tax returns of this nature are our “bread and butter.” We understand the issues that are most often examined and we are very familiar with federal procedure.
It is also true that there are many newer, less-experienced Examiners and Revenue Agents, which is shifting resolution of these matters to the Appeals Function. We are particularly skilled at writing very effective Appeals Protests which settle cases much faster and with greater efficiency and ease. Harder to defend, however, are the penalties imposed by the Internal Revenue Service for “accuracy” when adjustments are agreed upon. Despite these difficulties, we understand those arguments which have the best chance of prevailing.
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Few things in life are as stressful as owing the Internal Revenue Service or the Franchise Tax Board money that you can’t pay… These taxing agencies are among the most formidable creditors on the planet. The WORST thing you can do is to bury your head in the sand and pretend they will go away.
But what can you do when you cannot pay the Government? Actually, you have only 5 overall strategies available to you:
- Pay the tax… yes, suck it up and write the check, if you can… this includes a plan to pay-in-full within 120 days.
- Propose an Offer-In-Compromise – a contract between you and the Government to pay less than the full amount. But unlike what you may have heard on late-night television or the radio, this is NOT a “pennies on the dollar” approach.
- Installment Agreement – payment over time until either the tax is paid-in-full or the statute of limitations for collections “runs out.”
- Uncollectible Status – sometimes all we can do is convince the government that you are presently uncollectible.
- Bankruptcy… yes, under the right circumstances, taxes MAY be discharged in bankruptcy!
As you might imagine, each of these strategies are mired in complex procedures and fraught with traps for the unwary or the uninformed. OUR JOB is to protect and preserve your rights and get you every “bite at the apple” possible to get you the best result possible.
But you as the client MUST be realistic, and you must approach this with the correct attitude of contrition and cooperation to have the greatest chance of “success.” We will be successful if your expectations are realistically matched to the complexity of your situation. Sometimes the “bull wins the bullfight.” Collection defense is largely a series of human interactions and therein lies the rub.
As a firm, we are NOT one of those late-night “mills” that will take your money and promise you the sun, the moon and the stars. We do not make promises that we may not be able to keep. All we promise is to work as hard as we possibly can to get you the very best results possible. Period.
No one works harder for our clients than we do.
We have lots of experience in this area. Mr. Jager has lectured and written on this topic extensively to professional groups. He is published in the Journal of Tax Practice and Procedure by Commerce Clearing House on the topic of using the Collection Due Process Forum for resolving tax controversies, which continues to be relevant and useful. Click here to read this article.
In addition, another useful article also published in the Journal of Tax Practice and Procedure by Commerce Clearing House in the December 2015/January 2016 issue, deals with preserving the administrative record in IRS Appeals, so that if necessary, the entirety of the record is available for consideration by the United States Tax Court. Click here to read this article, which has been very well and widely received by the tax practitioner community
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What does an “Innocent Spouse” look like? In our experience, an innocent spouse can be either a former husband or a former wife, although wives are generally more often the “innocent spouse.”
While there are variations, the classic “innocent spouse” [the “Requesting Spouse”] is one who signed a tax return with his/her spouse [the “Non-Requesting or ‘NR’ Spouse”] but had no clue what was in that return either because the Non Requesting spouse would not discuss the tax return or the Requesting Spouse was too afraid to ask. Sadly, these cases often include issues of domestic violence, intimidation and abuse.
Other situations may involve situations where only the Non-Requesting Spouse was involved in a business venture and it would be inequitable to have the Requesting Spouse liable for the tax.
These cases depend greatly upon the facts and circumstances, and if you believe you may be an “innocent spouse,” we encourage you to ASK!
There are no judgments made here in this office. Please know that you will always be treated with respect and great courtesy.
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Services to Other CPA Firms
ATTENTION CPA Colleagues: We are available to assist you with your client controversy issues. You do not need to worry that we will attempt to steal your client away from you, and we are willing to state that in our engagement agreement…
When a general practitioner physician refers a patient to a specialist, the patient returns to the G.P. after treatment. Using that same model, you can safely refer your client who is undergoing either an examination or collection controversy and rest assured that your client will return to you once the “treatment” is completed.
We are happy to provide a roster of firms with whom we have worked…
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Services to Law Firms
For law firms, we are available to act as the “Kovel Accountant,” when privilege is needed and the services of an Accountant are adjunct to your services as the attorney. The accounting work becomes cloaked in the attorney work product privilege [See United States v. Kovel, 9 AFTR 2d 366, (296 F2d 918), (CA2), 1961].
Also, Mr. Jager is available as an “expert witness,” particularly with regard to meeting the professional standards and standards of the community in income tax matters. With more than 20 years of teaching experience at the University level, many lawyers note Mr. Jager’s skill in explaining difficult concepts in simple layman’s terms easily to the Jury. This style of using non-technical language and lots of simple examples makes him likable without sacrificing any professional credibility.
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