rs-irs-audits

California State Specific Tax Issues

by


So now I’d like to talk to you about some issues with regarding that the states have specifically. In California, we have a number of challenges in dealing with the state taxis that are either less of an issue or non-existent at federal level. The first as I’ve kind of touched down earlier is overside. There is usually less overside on cases than there is at the federal level. And I mean by that, is the auditor or the collection agent is given a lot more latitude in most cases to handle the cases as they see fit as long as it falls within the administrative guidelines. This particularly has an impact on the examinations process so a lot of the times the auditors are kind of given free rein to define the scope of what the audit is in sales tax or in particular they can do a really detail investigation and go through a number steps that you may not find in the federal process. As a result of this and as a result of the states having fewer resources, there is often times administrative delay when dealing with the state cases. For example, the time frame in California right now is if I were to represent a client in a sales tax audit and me and the auditor just agreed on the result and I filed and appeal, it would take anywhere from 8 to 12 months under the current structure to hear that appeal.

Read more

How the State of California Locates Out of State Taxpayers and Their Assets

by

In addition to in-state collections actions, I want to talk to you briefly about out-of-state collections actions. So, California specifically is prohibited by and large from seizing assets in another state. There are jurisdictional restrictions from California going into a neighboring state and seizing an asset in that state. It violates federal law and it runs counter to the constitution. However, what the loophole that California uses to get around this is they target financial institutions and any other third parties that may have a foothold in California. So, for example, if I am a Texas resident and I have a Bank of America account in Texas with $50,000 in it, and I owe $50,000 to the State of California, in California, through Bank of America’s contact with California, can request that that money be levied. Any financial institution, any insurance company or retirement account or anything like that or employer that has a foothold within California can be subject to levy.

Read more

How Does California Locate Taxpayers and Their Assets?

by

So this is actually a very interesting subject and something that we as tax practitioners talk about quite frequently. So the first way that California tracks you is through any filings that you do with the state. So for example, everybody in California files a tax return with the Franchise Tax Board and you have an address on them. So they use the address based on your FTB returns and the addresses that are submitted to third parties like banks and credit institutions and things like that to track your current information. Number two is they pull your credit report. So the same credit report that you can pull through Experian or TransUnion the state of California has access to and they can use it to locate taxpayers and their assets. Number three is California gets data from the IRS. So the IRS has a much more expanded database of taxpayer information and particularly for taxpayers that have moved out of California or might be in other places. The federal government is often a much more reliable and more accurate source of information.

Read more

Should I Be Concerned If I Am Selected for an IRS Audit?

by

Should I Be Concerned If I Am Selected for an IRS Audit? So understanding that an audit is a basic check here’s why I think that you should be somewhat concerned if you’re selected for audit by the IRS so the first thing to understand is that the government can’t audit everybody the government is operating with very limited resources particularly over the last few years politically it’s not popular to fund the IRS to create havoc or create any sort of discontent among floating tax payers as a politician funding the IRS is not something that makes you popular with your constituency but the reality is is with a shrinking budget and with the IRS being forced to do more and more things and do that differently the IRS is very picky picky about who it chooses to audit so the first thing to consider is that if you were selected for audit there must be a good reason for it.

Read more

Brotman Law Featured in Inc. Magazine - Fastest Growing Law Firm in California