Offer in Compromise & Tax Agency Negotiations
Uncle Sam, in the form of the Internal Revenue Service or the Franchise Tax Board (FTB), can come a-knocking for their due at any time and for any taxpayer in all reality. Some folks are a lot less likely to ever be audited than others – for example, if you are the type of taxpayer to receive one W2 per year and nothing more, as long as the numbers match up, there’s not much to audit you on by the taxing agencies.
Risk of Tax Audit
However, if you are self-employed, claim the Earned Income Credit, or file anything other than a 1040 EZ, you are a taxpayer in the cross hairs of a tough period of history. For those individuals earning a gross $200,000 or less per year, the audit or examination rate has stayed largely the same – about 1.04% of all returns. For those individuals earning a gross of $200,000 or more per year (and before you scoff – this is a number quantified before expenses on Schedule A, C or E), the examination rate has gone up substantially – from approximately 3.1% in 2010 to 3.93% in 2011. That’s a huge increase, considering the millions of people who file a tax return. For most people, a numbered letter titled “CP 2000” will begin the examination process by proposing changes to a previously submitted tax return. As in all things, the California state Franchise Tax Board and the federal Internal Revenue Service do have different rules and standards, which can lead to a byzantine maze of rules for any taxpayer to try and adhere to for compliance before and after an examination.
Opportunities For Negotiating Your Tax Liability
If you do not admit to owing a liability that is unpaid in step one, which is during the drafting and submission of a tax return – then your first opportunity to negotiate and work with the taxing agencies on a liability is in the examination framework. Of course, if there are errors that exist – you will have to live with the corrections. Regal Tax & Law Group, PC can typically tell you which adjustments are going to be made by the taxing agency and which can be fought to a zero dollar adjustment on a first and complimentary consultation because some items are always eligible for discussion. For example, if the examiner questions your home office expense, that expense can certainly be proven and thus continue to be deductible, or not proven and thus not be deductible.
Negotiating With The IRS & Franchise Tax Board
Most people call our office looking for a magic wand that grants us access to the taxing agencies to freely negotiate liabilities, interest and penalties. Some offices and so-called professionals working with the taxing agencies claim to have just such a magic wand – but we pride ourselves on providing forthright and attainable advice to our clients, starting even here, on our website. Negotiating with the taxing agencies is unlike negotiating the sales price of an automobile or anything else really. State and federal law dictates to a very large degree exactly what can be done and what cannot be done, and all negotiations must exist within that framework. For some people, an Offer in Compromise will be the only option for negotiating a liability. For others, those facing a very severe and unusual circumstance (death or disability chiefly governing this option), actually asking the taxing agencies to escalate the file to someone with more authority than the collectors answering the phone is the right fit. Whichever it is, Regal Tax & Law Group, PC is here to help provide information so that you can make the decision that is the best fit for you and your family, and to provide you with fast, friendly and helpful service at a price you can afford.
Contact us, or call 866.849.8566 to speak with a knowledgeable tax lawyer in San Francisco.
Serving California including Alameda, Contra Costa, Marin, Napa, Oakland, San Mateo, Santa Clara, Solano and Sonoma