Tax Problems & Resolution
If you find yourself facing the IRS collections process and the related penalties and consequences that come with that, Optima Tax Relief is standing by with access to the various tax resolution programs, and is ready to help. We can provide you the experienced tax resolution advice, guidance and representation needed to successfully navigate the IRS. We are experts with all tax resolution options available and our only mission is to remedy your IRS problems and get you back in good standing.
What is Tax Audit Representation?
Tax audit representation, also called audit defense, is a service in which a tax or legal professional stands in on behalf of a taxpayer (an individual or legal entity) during an IRS or state income tax audit.
During an income tax audit or examination, the IRS and all states allow a taxpayer to have an authorized representative. The representative must have permission to practice before the IRS or state, and specific credentials are required. The types of representatives who are allowed to represent taxpayers before the IRS in income tax audits include attorneys, CPAs, and enrolled agents.
An audit representative develops the strategy used to defend the taxpayer’s position. He or she assists the taxpayer in preparing all documents requested by the taxing authority and typically attends all meetings and handles correspondence on behalf of the taxpayer.
What To Do If You Get Audited
Unfortunately, some unlucky people wind up getting audited.
Seventy percent of audits are just a letter asking for more information about your tax returns, and you’re asked to mail back forms proving your income or deductions. In other cases you’ll get an invitation to meet with an agent to discuss your tax forms, a scenario that sends many taxpayers into a panic.
Well there’s no need to panic, but there are certain steps you should take.
Don’t ignore the letter
Ignoring the IRS is the worst possible thing you can do. The situation won’t go away.
While you should write back as soon as possible, you or your audit representative can ask for more time to gather the paperwork and forms. A two week extension is not an unreasonable request of your IRS agent.
Decide whether you need representation
Most of the time the letter you get in the mail is just a simple request for information – the IRS just wants you to mail in your 1099 form, for instance, or they want to see receipts for the business meals you deducted. In that case, just sending in the requested paperwork is usually sufficient, and you don’t need to get your lawyer or accountant involved.
If you can’t find the information they’re looking for, you’ll probably want to call a professional to advise you on your next move. And if you’ve been called in to meet with an agent, you should almost certainly bring in outside help from a qualified tax attorney or accountant.
You’ll need to grant power of attorney to your audit representative, to let them handle everything while you stay home.
You might think that bringing in a professional firm that deals with audit representation will annoy the agent or make him or her think you’re guilty – it will do quite the opposite, actually. Your IRS agent will generally prefer to deal with an attorney because they will prepare the requested information in a way that’s easy for the agent to read, and will do so in a dispassionate and professional way.
Tell them what they want to know (and nothing more)
Only about 2% of audits are random; the rest of the time, the IRS has very specific questions it wants answered, and will request forms and receipts accordingly.
That means two things: Send or bring all the forms you’re asked to bring, and answer all the questions to the best of your ability.
That second point is important. Whereas keeping your mouth shut is usually best when you’re getting interviewed by the police, in an audit you’re usually best served by stating your case and answering all of the agent’s questions. After all, if the IRS is calling you in to talk about how much income you reported, it’s probably because the agency believes you’re underreporting. The audit is your opportunity to convince the IRS otherwise.
With that said, it’s possible to overshare. This is not the opportunity to brag about how much money you made last year.
Negotiate and appeal
Once the audit is done, the agent will assess any taxes and penalties you owe. However, the assessment can always be appealed. The IRS may be willing to cut you a deal that will make you happy because they don’t want the case to drag on. This is another time where it pays to have good audit representation form an attorney experienced with tax negotiation. A good tax attorney will be skilled at escalating the case to make a settlement easier.
The IRS’ lawyers are ready to negotiate and will often settle cases before going to court.
Get Audit Representation from Optima
If you have received that dreaded letter notifying you that your return has been selected for an audit, do not fear! We have represented many clients in both personal and business tax audits. Even if you do not believe that you have done anything wrong or are unsure of why you are being audited, we don’t recommend that you attempt to represent yourself.
We will provide you the experience and professionalism when dealing with your IRS or State audit. For a personal audit it is important to understand that returns are usually selected for statistical reasons. By contacting us we are able to become a buffer between you and the IRS and/or State. If you have a business audit, it is important to understand your rights. Before you allow them to take computers, records, even enter your place of business, stop and understand your rights.
By contacting Optima Tax Relief, we may be able to go into the audit office for you and we will have your case prepared and positioned to give you the protection you deserve. We know your rights and you have nothing to fear. If paperwork is missing we will help you put together all the documentary evidence you will need to come out of your tax audit successfully. Also most audits can be made via correspondence audits, so that there isn’t necessarily a need to appear. This allows us to handle a case across the nation regardless of your location.
Criminal Tax Defense
If the IRS Criminal Investigation Division starts investigating your case due to suspicions of tax fraud, you need to hire a criminal tax defense professional to represent you. The stakes are simply too high to risk facing a criminal investigation by yourself and no form of tax resolution should take precedence over hiring the right form of representation.
Whether a case constitutes tax fraud depends just as much on your intentions as on your actions. A specialist in criminal tax defense can guide you through the investigation and tax resolution process, giving you the best possible chance to avoid criminal charges.
Currently Not Collectible
If there is absolutely no way for you to pay your tax debt, and no way for the IRS to collect the money owed via the more traditional forms of tax resolution, you can file for “currently not collectible” status.
“Currently not collectible” means exactly what it sounds like. The IRS will not be able to collect any owed taxes or penalty charges if:
* Your wages cover no more than your necessary living expenses so that there is no amount the IRS can garnish
* You have no assets worth levying. Remember that the IRS cannot seize an asset if you have less than 20 percent equity in the item or if the expenses involved in seizing and selling it are more than the equity is worth. This makes the IRS seeking another form of tax resolution unlikely.
The fact that you have nothing worth the IRS taking is not exactly an enviable position to be in, but it can help in dealing with them. If your account is deemed to be uncollectible, the IRS will stop the collection process until your financial situation improves and another form of tax resolution becomes more realistic. Interest and penalties will continue to build up against you, and you will have to provide financial statements each year to show whether or not you are still “currently” unable to pay.
If the financial statements show that your situation has improved enough, the IRS collection process will resume. But if the 10-year statute of limitations for back taxes expires while you have “currently not collectible” status, the tax debt itself will become permanently not collectible and no other form of tax resolution will be needed.