Los Angeles California Tax Attorney Blog

Tax Attorney Advice - Each year there are over 10 million IRS taxpayers who haven't filed their taxes or IRS 1040 tax return.

Taking the following action may save a lot of taxes and avoid criminal prosecution by the IRS. If you are being contacted by the IRS or are receiving threatening letters from the Internal Revenue Service, you may need to contact a tax attorney for guidance.

File All Tax Returns

Taxpayers should file all tax returns that are due, regardless of whether or not full payment can be made with the return. Depending on an individual’s circumstances, a taxpayer filing late may qualify for a payment plan. All payment plans require continued compliance with all filing and payment responsibilities after the plan is approved.

Facts About Filing Tax Returns

Failure to file a return or filing late can be costly. If taxes are owed, a delay in filing may result in penalty and interest charges that could increase your tax bill by 25 percent or more per year.
There is no penalty for failure to file a tax return if a refund is due. But by waiting too long to file, you can lose your refund.

In order to receive a refund, the return must be filed within 3 years of the due date. If you file a return, and later realize you made an error on the return, the deadline for claiming any refund due is three years after the return was filed, or two years after the tax was paid, whichever expires later.

Taxpayers who are entitled to the Earned Income Tax Credit must file a return to claim the credit even if they are not otherwise required to file. The return must be filed within 3 years of the due date in order to receive the credit.

If you are self-employed, you must file returns reporting self-employment income within three years of the due date in order to receive Social Security credits toward your retirement.

Taxpayers who continue to not file a required return and fail to respond to IRS requests for a return may be considered for a variety of enforcement actions. Continued non-compliance by flagrant or repeat nonfilers could result in additional penalties and/or criminal prosecution.

Documents Required to File Your Taxes - IRS Tax Return Form 1040:

Forms W-2 – Forms from employers showing wages for the year.

Forms 1099 – Forms from banks and other financial institutions showing interest and dividends. Forms 1099 also report self-employment income.

Information on expenses to claim on the return, such as itemized deductions, child care expenses, or employee business expenses.

Social Security numbers for dependent children and any other person claimed as a dependent

A copy of the last tax return filed.

We are tax attorneys and serve our clients in the following areas: New York, Los Angeles, Chicago, Houston, Philadelphia, Phoenix, San Antonio, San Diego, Dallas, San Jose, Detroit, Jacksonville, Indianapolis, San Francisco, Columbus, Austin, Memphis, Baltimore, Fort Worth, Charlotte, El Paso, Milwaukee, Seattle, Boston, Denver, Washington DC, Las Vegas, Portland, Oklahoma City, Tucson, Albuquerque, Long Beach, Atlanta, Fresno, Sacramento, New Orleans, Cleveland, Kansas City, Mesa, Virginia Beach, Omaha, Oakland, Miami, Tulsa, Honolulu, Minneapolis, Colorado Springs, Arlington.

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IRS Tax Audit Rate Increase for Los Angeles area Taxpayers and Businesses.

Long Beach Tax Attorney -The IRS continues to make strong progress in a number of key tax collection, IRS tax audit and tax enforcement areas. Taxpayers in the Los Angeles area including Pasadena, Long Beach, Sherman Oaks, Woodland Hills, Santa Monica, Redondo Beach, Torrance, Gardena, Santa Ana, Irvine, Anaheim, El Monte and Palmdale received more IRS Tax audit notices than in prior years.

The IRS tax audit, tax collection and IRS tax enforcement efforts increased again last year. IRS audited 84 percent more returns of individuals with incomes of $1 million or more than during 2006. Overall, IRS tax enforcement revenue reached $59.2 billion, up from $48.7 billion in 2006 and nearly $34.1 billion in 2002.

Highlights of the enforcement and services numbers for fiscal year 2007, which ended on September 30, include:

Individuals
IRS Tax Audit rates increased in 2007, both for overall individual rates and for higher-income taxpayers.
Tax Audits of individuals with incomes of $1 million or more increased from 17,015 during fiscal year 2006 to 31,382 during fiscal year 2007, an increase of 84 percent. One out of 11 individuals with incomes of $1 million or more faced an audit in 2007.

Overall, the total individual returns audited increased by 7 percent to 1,384,563 in 2007 from 1,293,681 in 2006. That’s the highest number since 1998.

Audits of individuals with incomes over $200,000 reached 113,105 returns, up 29.2 percent from the prior year total of 87,885.

The IRS increased audits of individual returns with income of $100,000 or more, auditing 293,188 of these returns in 2007, up 13.7 percent from last year’s total of 257,851.

The IRS filed 3.8 million tax levies and almost 700,000 IRS tax liens during 2007, an increase from the previous year and a substantial increase from five years earlier.

Businesses

In the business arena, the IRS continued efforts to review more returns of flow-through entities – partnerships and S Corporations. While large corporate audits are down slightly, IRS has increased focus on mid-market corporations – those with assets between $10 million and $50 million dollars. The IRS enforcement budget in 2007 was similar to the budget in 2006, and in times of flat budgets, the agency cannot increase activity across the board but must address the areas where there is growth and potential risk.

IRS Tax Audit of S Corporations increased to 17,681 during 2007, up 26 percent from the prior year’s total of 13,984.

IRS Tax Audit of partnerships increased to 12,195 during 2007, up almost 25 percent from the prior year’s total of 9,777.

IRS Tax Audit of mid-market corporations increased to 4,473, up 6 percent from last year’s total of 4,218.

IRS Tax Audit of businesses in general rose to 59,516, an increase of almost 14 percent from the prior year’s total of 52,223.

Although the IRS Tax Audit of large corporations dipped slightly in 2007 to 9,644 IRS Tax Audit, the number of IRS Tax Audit is up 14 percent from the fiscal year 2002 level.

The key to proper IRS tax audit defense is to establish tax audit strategy at the beginning of the audit. If you are being audited by the IRS or California FTB and need an experienced tax attorney contact a Tax Attorney at Tax Lawyers Group.

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Torrance Tax Attorney —The Internal Revenue Service(IRS) announced today that it has automated the user fee calculations for IRS taxpayers entering into an installment agreement throughout California including IRS taxpayers seeking payment plan in the Los Angeles, Long Beach, Pasadena, Torrance, Gardena, Garden Grove, El Monte, Sherman Oaks, Woodland Hills, Orange, San Jose.

Previously, IRS taxpayers were required to submit a paper IRS Form 13844 to request a reduced user fee. Now, eligibility for reduced fees is determined automatically by the IRS.

An IRS installment agreement allows IRS taxpayers who have tax problems to pay their full tax debt in smaller, more manageable amounts, though penalties and interest continue to accrue on the unpaid portion of that IRS tax debt. IRS taxpayers are charged a one-time fee to set up an installment agreement with the IRS. A reduced fee is available for qualifying taxpayers.

Contact a tax attorney if you have any tax problems (310) 788 9820.

Continue reading "IRS Tax Problem? Installment Payment Plan for California taxpayers in Los Angeles, Long Beach, Torrance, Pasadena, Gardena, Orange and Riverside County." »

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Many Los Angeles, Long Beach, Orange, Riverside, San Jose area business owners and taxpayers who have IRS tax problems may not have been aware of the tax settlement program called offer in compromise. Tax attorneys who handle these type of cases should prepare a comprehensive tax and financial analysis in order to prepare the most favorable tax settlement proposal which would result in minimum tax debt being paid to the IRS.

Although the IRS discourages and may create obstacles to have your IRS taxes reduced, a good tax attorney will often be able to prepare legal arguments that would contest and challenges put forth by the IRS concerning the tax settlement proposal.

An IRS Offer in Compromise allows taxpayers to settle their tax liabilities for less than the full amount. The objective of the IRS Offer in Compromise program is to accept a compromise when it is in the best interests of both the taxpayer and the government and promotes voluntary compliance with all future payment and filing requirements.

Major Changes to the IRS Offer in Compromise Program

The Tax Increase Prevention and Reconciliation Act of 2005 (TIPRA), created major changes to the IRS IRS Offer in Compromise program as it relates to lump sum offers, periodic payment offers, and a determination as to when an offer is accepted. These changes affect all offers received by the IRS on or after July 16, 2006.

Continue reading "IRS Offer in Compromise - Resolve Tax Problem - Los Angeles, Long Beach California Tax Attorney" »

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Los Angeles Tax AttorneyLos Angeles – The Internal Revenue Service today announced that interest rates for the calendar quarter beginning April 1, 2008, will drop by one percentage point. The new rates will be:

• six (6) percent for overpayments [five (5) percent in the case of a corporation];
• six (6) percent for underpayments;
• eight (8) percent for large corporate underpayments; and
• three and one-half (3.5) percent for the portion of a corporate overpayment exceeding $10,000.

These rates relate to interest on IRS taxes but not on the IRS Tax penalties. Often times, our clients in Los Angeles, Long Beach, Torrance, El Monte, Pasadena and San Jose California area taxpayers are inundated with IRS tax, interest and penalties. Depending on your case, some of your interest and much of your penalties may be reduced. If you require more information contact us at 310 788 9820.

Under the Internal Revenue Code, the rate of interest on IRS tax is determined on a quarterly basis. For taxpayers other than corporations, the overpayment and underpayment of tax rate is the federal short-term rate plus 3 percentage points. Generally, in the case of a corporation tax, the underpayment tax rate is the federal short-term rate plus 3 percentage points and the overpayment IRS tax rate is the federal short-term rate plus 2 percentage points.

The rate for large corporate tax underpayments is the federal short-term rate plus 5 percentage points. The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus one-half (0.5) of a percentage point.

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California IRS Offices to Contact Third Parties for IRS Tax Audit and IRS Tax Collection

Los Angeles Tax Attorney - In 1998, the Congress amended Code Section 7602 to prohibit Internal Revenue Service employees including IRS Agents and IRS Auditors from contacting third parties with respect to the taxpayer’s IRS tax liability without providing reasonable advance notice to the taxpayer that third-party contacts may be made.

Most IRS tax attorneys and tax lawyers who resolve tax problems were concerned that (1) that such contacts by the IRS may have negative effect on the taxpayer’s business and could damage the IRS taxpayer’s reputation in the community, and (2) that taxpayers should have the opportunity to resolve his tax problems through his tax attorney before the IRS contacted third parties.

IRS third party contact notice provides a general tax notice to the taxpayer before most third-party contacts are made, and then to periodically (or upon the taxpayer’s request) provide the taxpayer with a record of the persons contacted by the Internal Revenue Service. If you are a taxpayer located in Los Angles or California with IRS tax problems, IRS tax audit or IRS tax levy collection, make sure you contact IRS tax attorney so that your IRS tax rights are protected.

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IRS Tax and Penalty Collection to increase in Los Angeles and California metro regions.

IRS Tax Attorneys and lawmakers advising Congress are likely to endorse giving Internal Revenue Service more tools to improve IRS tax debt collection, compliance and boost revenue.
Internal Revenue Service faces congressional pressure collect additional $290 billion per year in taxes which go uncollected each year.

Los Angeles and California based IRS centers have been increasing support staff trained for IRS tax collection and audits over the last three years. IRS and the government concurs that collecting additional tax, interest and tax penalties from those who already owe IRS taxes is seen as a smarter move than raising new taxes or tax penalties.

If the president's proposals pass, it would require that brokerage houses and mutual funds to report to the Internal Revenue Service monies invested by taxpayers into various securities. Currently, taxpayer or brokerage houses are not required to report to the Internal Revenue Service such investment records. IRS estimates that if the new tax proposal passes, IRS would raise additional 7.5 billion dollars from 2008 through 2018. “President’s new tax proposal has high level of support from both houses of Congress and is likely to pass this Congressional term,” said tax attorney Victor Yoo, Los Angeles tax attorney with Tax Lawyers Group, APC.

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