We Resolve IRS Tax Audit Disputes
Have you gotten an IRS audit notification? Do you owe the federal government more than $10,000? There’s no need to be alarmed. Damiens Law Firm, PLLC is a tax firm that can represent you in dealing with the IRS.
We specialize in IRS audits and can handle your IRS auditor’s investigation of your tax returns. We may also assist you in challenging your audit before the IRS Tax Court.
Learning that you are about to have an IRS tax audit is a frightening experience. Most IRS audits are not because of suspected criminal activity, but the prospect of IRS agents digging through your tax returns and finances, looking for the slightest fault, is enough to send a chill down the hardiest taxpayer’s spine.
When dealing with the IRS, it is essential to know your full legal rights, including the right to silence and an attorney. Whichever type of audit and tax problem you are facing, it is usually wise to immediately hire an IRS tax audit lawyer to ensure the best possible outcome.
Payroll Tax Attorney
The Internal Revenue Service has no tolerance for employers who fail to pay payroll taxes. If you’ve made a mistake when calculating your payroll taxes or have accumulated a payroll tax debt, you can expect the IRS to remind you of your tax obligations.
Failure to pay payroll tax can result in financial penalties and even criminal charges. Therefore, business owners that have made a mistake when filing their taxes or misreported wages paid will want to contact business tax lawyers as soon as possible.
In addition, payroll tax debts can negatively impact businesses, so employers must remit payroll taxes promptly to avoid payroll tax issues.
Let a Business Tax Attorney Handle Employment Tax Issues
Payroll tax problems escalate rapidly, and more than one employer has found themselves wondering how they ended up in trouble with the IRS simply because they made an error when withholding funds from an employee’s paycheck. If you’re an employer who failed to collect the appropriate amount of taxes from employee wages, you’ll want to discuss your situation with an experienced tax attorney immediately.
Clients who fail to secure legal representation early in their dealings with the IRS often wish they’d contacted a payroll tax lawyer sooner. The benefits of working with a payroll tax attorney are extensive, and typically clients with attorneys representing them against the IRS have more favorable outcomes than those who don’t.
Payroll tax attorneys have extensive knowledge of payroll law, which enables them to find resolutions for your employment tax issues that lawyers specializing in other areas might overlook.
What Are Payroll Taxes?
Payroll taxes are the money employers must pay to the IRS on behalf of employees. These funds are removed from the employee’s paycheck by the employer and remitted to the IRS periodically.
The federal payroll taxes that most individuals think of when discussing employment taxes are Federal Insurance Contributions Act (FICA) taxes. Social Security tax and Medicare tax make up FICA taxes. Depending on the state the business is located in, state and federal income tax may be included with payroll taxes.
Income Tax Withholding
Most states require employers to withhold income taxes from their employee’s wages. Only nine states do not, including Tennessee.
Employers in Tennessee will not have to withhold income tax from employees. However, Mississippi does require income tax to be withheld.
Mississippi Income Tax Withholding
Employers in Mississippi must pay the appropriate federal and state agencies the total amount of Mississippi income tax withheld from employees. These payments will be due monthly or quarterly.
If an employer does not withhold the correct amount of taxes or files late, a 10% penalty rate will be added to the amount due. Also, a delinquent payment will accrue interest at a rate of 0.5% per month.
How an IRS Audit Attorney Can Help You
A tax audit attorney acts as a mediator between you and the IRS. They protect you from IRS intimidation, prepare a robust defense strategy, and guide you through the entire audit process.
An experienced IRS tax attorney knows the tax law inside out and understands how the IRS operates. They can potentially limit the scope of an audit, reduce your final tax bill, appeal an audit’s findings in tax court, and provide legal representation in the case of criminal charges.
What initiates a tax audit?
Regardless of how carefully you complete your taxes, the Internal Revenue Service may still choose to audit your tax return. An audit is simply a way for the IRS to double-check your return to ensure that you did not make any mistakes. Sometimes, tax audits are random. Other selections are made based on suspicious activity.
The IRS has many things in its arsenal to go after you. From the very first letter from the IRS, it takes a psychological toll on people and makes them feel like they are constantly being watched. It is important not to give in to this intimidation because there are ways of fighting back!
The IRS needs information from you, but that doesn’t mean they should get everything they want. You have the right to remain silent and the right to an attorney. Do not give in to intimidation tactics!
Damiens Law Firm, PLLC can help you deal with your IRS audit. We have multi-specialty tax professionals and will work tirelessly on your behalf to achieve the best possible outcome for your case. Contact us today for a free consultation.
When you get an IRS audit notification of your tax return, it can be very alarming. You may owe the federal government, but there is no need to panic. Damiens Law Firm, PLLC is a tax firm that can represent you and help you deal with the IRS. We specialize in tax audits and can handle your IRS auditor’s investigation of your tax return. We may also assist you in challenging your audit before the IRS Tax Court.
Why the IRS may contact you?
A financial audit doesn’t imply that there is criminal involvement. Tax returns contain complicated financial information on tax returns which requires verification of their accuracy. The auditing process will involve examining and reviewing your documents for intentional and unintentional mistakes. Taxpayers are chosen by the IRS by random selection or computer screening-based triggers using statistical calculations. If you do not adhere to these standards you may have a chance to get audited.
Common myths about audits
Audits are scary! But these are not as dramatic as what’s shown on TV. The process has become clinically more complex. Many people think tax audits only target the rich and only deductions are subject to audits. This is not always the case. The IRS also looks for people who over-report their income or omit to report some of it.
The IRS acts much like the TSA at airports. The return is randomly chosen and then others are selected to see what appears unusual.
What to do if you receive a letter from the IRS?
If you are contacted by an IRS agent:
The first step is to determine why you are being selected for an audit. The agent will send you a notice that will list the items being questioned. You will have a short time to respond to the notice. You should gather all of the documentation that supports your position and contact a tax attorney. We will examine your case and, if you each agree, represent you throughout the audit process.
The next step is to understand what types of records and documentation the IRS will request. You then need to organize these records and review your reported income. To allow our attorney to respond to the audit. This will be much more difficult for small business owners to do themselves. The Internal Revenue Service will want to review both personal and business expenses. The tax preparation process for a small business owner is much more complex and you should not try to file an income tax return yourself.
Do I Withhold Payroll Taxes For Independent Contractors?
An employer is responsible for withholding and paying taxes on an employee’s paychecks but not on the money paid to independent contractors. Self-employed individuals or independent contractors will be responsible for paying the taxes that would normally be paid by the company employing them.
While using independent contractors may seem like an excellent way to avoid paying Social Security, income, and Medicare taxes, you’ll want to take care when labeling a worker as an independent contractor or employee.
The IRS has strict guidelines defining employee classification; violating them to lower your company’s payroll tax will result in severe penalties. Sidestepping the law in an attempt to collect and pay fewer taxes now will result in trouble down the road if your employee reports you to the IRS.
Why Do I Need a Payroll Tax Lawyer?
Business tax lawyers will help you navigate your business out of a tight spot with the IRS while still following federal and state law. There are numerous ways your business tax lawyer can help you fix your payroll tax problems, including the following:
- Negotiate with the IRS and state agencies on your behalf
- Establish a payment plan with the IRS for your tax debt
- Avoid the assessment of personal liability for trust fund penalties
- Secure a temporary moratorium on payroll tax
- Receive not collectible status from the IRS
- See if the statute of limitations for unpaid payroll tax has expired
Understand Why You Are Being Audited
One of the scariest aspects of an IRS audit is the uncertainty. You may not have a clue why you are being audited, so you begin to imagine the worst.
Upon receiving the IRS audit letter, the first logical step is to work out why they’ve selected you. A good tax audit attorney can help you scrutinize your past returns and identify potential problems, all under the protection of attorney-client privilege.
Once you understand the situation clearly, you will be in a safer and more confident position. Your lawyer will then be able to prepare the optimal response to the IRS and handle all subsequent communications.
Your IRS Audit Lawyer Can Limit the Scope of Your Audit
Most IRS audits begin with a single tax year. Then, if the auditor believes there might be errors in other years, they can expand the audit to cover multiple years, throwing their net wide to see what they catch.
An experienced tax audit attorney can often keep the scope of the audit to just one year. Your attorney can launch his or her own internal investigation into your returns and identify any potential problems.
They can address those specific issues with the IRS. This often keeps the scope of an audit from expanding, resolves it sooner, and saves the client a good deal of money and time.
Chances Are Slim You’re Suspected of Criminal Activity
The IRS audits over 620,000 tax returns each year and only launches around 3,000 criminal investigations. When you first receive that audit letter, chances are usually low that you’re suspected of breaking the law. But you never know what they will find or what mistakes might be made. You could have made a mistake on your return; alternatively, the IRS may have made a mistake.
And of course, these criminal investigation figures don’t cover the various civil penalties the IRS has at its disposal, which can also be devastating to taxpayers. If you’re found to owe unpaid back taxes, the IRS can fine you and even file liens and levies to seize your property and wages. All of which can be appealed with the help of a good tax audit lawyer.
Common Causes for an IRS Tax Audit
Most IRS audits are triggered by an automated score assigned to each tax return, called a Discriminant Inventory Function (DIF) score. This score estimates a probability of unreported income based on the percentage of deductions claimed, among other factors.
Apart from the DIF score and suspicions of tax fraud, the audit process can also be triggered if one of your business transactions comes under IRS investigation. Audits can also be triggered if someone tells the Internal Revenue Service that you have unreported taxes owed or the tax professional responsible for your tax planning and preparation is being audited.
Certain types of taxpayers are also more likely to receive notification of an audit. This includes self-employed individuals and anyone with large home office deductions, significant foreign income, or offshore accounts.
Hire an IRS Tax Lawyer If Your Tax Preparer Made Mistakes
If you suspect that mistakes were made by the certified public accountant (CPA) or enrolled agent that prepared your tax returns, it’s unwise to have the same individual handle the resulting IRS audit. In the case of negligence, fraud, or even simple human error, the preparer may hesitate to admit fault to you. They might even fail to detect or understand their own mistakes.
Also, as previously mentioned, the tax preparer themselves might be experiencing an audit because of a pattern of mistakes or suspected tax fraud among their clients. So rather than have the same individual represent you during your own audit, it’s far better to have an experienced IRS audit lawyer step in to replace them, at least for the duration of your audit.
Tax Audit Attorney vs CPAs and Enrolled Agents
Both CPAs and enrolled agents can provide IRS audit defense services. But neither necessarily has the formal knowledge of IRS internal audit procedure that an IRS tax attorney has. Additionally, they certainly are not trained and experienced with the nuances of tax law.
Neither CPAs nor enrolled agents can help you with the legal side of audits and other legal tax matters, especially not criminal defense. IRS audit attorneys, on the other hand, can advise you on the potential legal consequences of all your actions during an audit.
Gain Full Attorney-Client Privilege
There is a confidentiality privilege between a client and their CPA or enrolled agent, but this privilege is legally very limited. This means they can be compelled to share information with the IRS.
This is not the case with the robust confidentiality of communications granted under the privilege between an attorney and their client. With an IRS audit attorney, even transactions and communications that might trigger criminal scrutiny, such as tax fraud or tax evasion, are covered under the attorney-client relationship.
For this reason, you should always hire an IRS tax attorney for any serious matters relating to tax law. An IRS audit lawyer can also help to ensure you avoid potential legal issues in the first place.
Never Face a Field Audit Without an IRS Audit Attorney
There are various kinds of tax audits. The most comprehensive is a field audit. These are the rather dramatic audits you see in the movies that strike fear into the hearts of taxpayers.
With these in-person audits, the auditor visits your home or business premises to carry out a thorough investigation. They’ll conduct interviews on-site, scrutinize your tax records and financial documents, and even obtain documents from third parties.
What the Auditor is Looking For
The IRS agent is primarily searching for inaccurate or false information. If they find any examples of this, they will try to determine if it was an innocent mistake or intentional fraud.
They are also looking for a failure to report all of your income, excessive deductions claimed, and any other unreasonable attempt to reduce tax liability. An attorney should always be present during these field audits, defending clients throughout the auditing process.
Bring Your IRS Tax Attorney to an Office Audit as well
The next level down from a field audit is an office audit where you will be invited to visit your local IRS office. These office audits are for when a tax situation isn’t large or serious enough to merit a field audit, but it’s too complex to resolve with a simple correspondence audit.
At one of your local IRS agency locations, you will be asked plenty of questions. Here, it’s also important to have an IRS audit attorney by your side, answering the questions for you.
IRS auditors are skilled at asking questions designed to lead you into saying things that are not in your best interest. An attorney will ensure you don’t slip up and cause the scope of your audit to expand.
Consider an IRS Audit Lawyer for Correspondence Audits
Correspondence audits make up over 70% of all audits. With these kinds of audits, the tax issue is usually relatively straightforward: simple enough that the IRS believes it can be resolved by mail.
Common issues include employee business expenses, questionable funds, profit and loss from business, and earned income tax credits. You might be asked for as little as a single document.
An IRS Tax Lawyer May Still Be Necessary
Don’t be lulled by the seeming simplicity of correspondence audits. A complication in the tax rules or your particular tax situation could cause the audit to escalate, requiring an in-person interview, in which case you should have a tax audit lawyer by your side.
Also, retain a tax audit lawyer for a correspondence audit if you have any missing documentation or think there might have been an error in your tax return. Good IRS Tax attorneys are also experts at writing tax law correspondence for their clients.
You Wish To Appeal the Findings of an Audit
If you’re unhappy with the findings of an IRS tax audit, you can appeal the decision. IRS audit attorneys can appeal IRS decisions, representing clients in tax court if needs be.
Following an audit, you may have had a lien or levy placed on your house or bank account. In this case, you only have 30 days to request an appeal hearing before the lien or levy is enacted. If you don’t act quickly with the help of an attorney, you might lose your property.
Weigh the Pros and Cons of Your Appeal
Before you file an appeal, consider the strength of your case with the counsel of a trusted IRS tax lawyer. When the Internal Revenue Service issues penalties for inaccuracies in a tax return or takes action to recover unpaid tax liability, they don’t let it go lightly.
An appeals process could be long and costly, so bear in mind how much you stand to gain or lose. Only appeal an IRS audit decision if your attorney is certain about the strength of your case.
You Suspect an IRS Criminal Investigation Against You
Any taxpayer facing criminal prosecution by the IRS needs a good IRS tax lawyer fighting their corner. You should also hire an attorney for your IRS audit defense before you’ve been informed that a criminal case is being put together. Retain an attorney as soon as you even suspect it.
This is because the IRS has no obligation to let you know when you’re being investigated for suspected tax fraud or any other tax-related crime. They proceed quietly, building the case behind the scenes. Once more, the uncertainty of the situation makes it all the more nerve-wracking.
How To Know You’re Under Investigation
An experienced IRS audit lawyer can help you figure out if you’re under investigation and then begin to prepare your defense. There are certain warning signs to look out for.
If more than one auditor turns up to interview you, or if any of your auditors have a gun and CID badge, it’s quite likely that you’re under criminal investigation. Likewise, if your auditor stops returning your calls and cancels appointments, you’re probably in hot water.
And if the IRS subpoenas your bank records or starts reaching out to your clients and other third parties without informing you, definitely consider it a red flag. Don’t hesitate to contact an IRS audit attorney.
How To Proceed When Facing a Criminal Case
When intentional tax fraud or tax evasion is judged to be a part of your tax planning and tax returns, you’ll be prosecuted by the US Attorney’s Office. This is the greatest fear of anyone being audited. And for good reason.
If found guilty, you’ll have to pay all the taxes owed plus additional penalties that are severe enough to financially ruin most taxpayers. In the worst case, you might also face up to five years in prison.
Stop Talking Without an IRS Audit Attorney By Your Side
As previously mentioned, you might not be aware that an investigation is even underway. But the auditor carrying out your civil IRS audit may well try to elicit an incriminating admission while communicating to you about your taxes.
This is why it’s so important to hire an attorney as soon as you catch the first whiff of trouble. Better yet, hire a tax audit lawyer as soon as you receive the initial audit notification.
And if you think you’re under investigation, never answer IRS questions without a lawyer there to answer for you. No matter what the IRS tells you, always remember your right to silence and to have an attorney.
Failure to Pay Payroll Taxes Escalates Quickly
Many businesses that end up with payroll tax debt find themselves in that unpleasant situation due to a lack of cash flow. The employer cannot afford to pay their payroll tax payment, so against their better judgment, they decide to skip one and do not discuss their situation with a business tax lawyer.
From there, things often snowball until penalties and interest have caused the payment owed by the business to become so large that the employer is incapable of paying it entirely. This failure to remit payroll tax can result in the IRS choosing to seize business assets or even bringing criminal charges against the employer or responsible parties.
Penalties on Payroll Tax Debts
If you’re like most business owners, you’re always looking for a way to cut down on business expenses. Payroll tax penalties are a business expense you can avoid as long as you follow tax law and promptly make your tax payments to the IRS.
The most common causes of payroll tax issues resulting in penalties are incorrectly calculating employment taxes, missing filing deadlines, and misreporting taxes.
While there are exemptions you can seek for unreported or late tax payments, such as natural disasters, death, or unavoidable absence of the responsible person, it’s far simpler to file your employment taxes correctly and on time than it is to try to prove to the IRS that you had reasonable cause for your failure to pay.
Contact a Business Tax Lawyer Today
If you don’t address your payroll debt immediately, it can cause significant tax problems for your business. Business tax attorneys will review your situation and communicate with the IRS to help find the best solution for your payroll tax problems.
There are avenues you can explore to obtain tax relief, but you’ll need a seasoned attorney to guide you. Payroll tax debts can devastate businesses, so a letter from the IRS about tax problems pertaining to your business is something to take seriously.
Tennessee and Mississippi Taxpayers Trust Damiens Law Firm, PLLC
Whether you misclassified an employee as an independent contractor or need to catch up on filing your payroll taxes, our firm is prepared to face the IRS on your behalf. Our clients know that we will do everything in our power to secure the best resolution possible for their payroll tax problems.
Protect your business assets and bank accounts by working with a business tax lawyer. Give Damiens Law Firm, PLLC, a call today at 601-488-2079.