Many businesses and individuals fall victim to IRS penalties due to lack of knowledge. There’s no doubt that the IRS has lots of rules and regulations that may be confusing to some who are new to it. If this is the case for you, you most likely need the services of an experienced tax attorney.

Investing in a tax attorney can save yourself and your business from; criminal charges, interest, and IRS penalties that can sneak up on you. Tax attorneys are simply lawyers with extensive knowledge in the very complicated and technical field of taxes.

When is the right time to hire a tax attorney or tax lawyers?

1. If you have a taxable estate and need to file an estate tax return, you need a tax attorney or tax lawyers. You will lose out on lots of money if you don’t have a tax attorney in your corner to help you with complicated estate planning strategies.

2. If you’re starting a business, especially an LLC or corporation, you will find a tax attorney or tax lawyers useful for legal counsel. This will also help you decide on which business structure will make the most sense for you, from a financial standpoint, in the beginning, stages.

3. When conducting business internationally, you are entering into different territories where the laws and regulations are different from that of the USA. With that being said, having an attorney handy will help you with creating appropriate contracts, and other legal matters related to business.

4. When bringing a case to the IRS. Many cases brought to the IRS usually falls on death ears. An attorney will make the process easier and give you a fighting chance.

5. When there’s a criminal investigation against you brought by the IRS, this shouldn’t even be up for discussion. There’s a 100% chance a tax attorney will be needed.

6. If you commit tax fraud (which we don’t encourage), a tax attorney can help with protection on privilege.

7. When you want an independent review of your case in front of the US Tax Court, an attorney is needed 100% of the time.

What does a good tax attorney or tax lawyers look like?

At the minimum, tax attorneys have a Juris Doctor degree and should be admitted to the state bar. However, you want a tax attorney with in-depth training in tax law. Some may even have a master of laws degree in taxation. Simply put, the more education and expertise your attorney has in taxes, the better. Choosing a good tax attorney can save you a prodigious amount of money while hiring a basic lawyer can cost you money.

When handling business in general, you need a tax attorney. This is especially true if you have something to lose, which most of us do. This can be personal finances, business revenues, or your freedom (if you’re fighting a fraud case that could lead to jail time). Either way, make sure you understand when it’s time to hire a tax attorney, and how to pick a good one.

Telephone Number: (310) 498-7508
[email protected]

There’s no doubt that a small business owner has an overwhelming number of responsibilities that are all calling for your attention at once. However, being pressed for time isn’t a good thing because you tend to ignore the little things that can cause more stress in your life. Yes, we’re referring to an audit. While an audit isn’t something “little”, the mistakes that can bring about an audit are minor with the help of a tax attorney or a tax lawyer. The thought of a tax audit representation makes small business owners cringe inside. Although, it isn’t guaranteed that you can stop an audit from ever happening, there are some steps that you can take as a small business owner to stop it from happening in the meantime.

An audit typically involves the IRS going through your income and expenses to make sure that the amounts reported are actually accurate. During an audit, the IRS is mainly looking for; exaggerated deductions, and unreported or under-reported income. You are obligated to provide all documentation as requested by the IRS.

In order to avoid the unnecessary hassle of an audit, here are 7 red flags that should be avoided at all costs to reduce the risk of your small business being audited.

1. Having a net loss profit for 3 out of 5 years

Your business must be able to have a profit for at least 3 years out of a 5-year period. If not, the IRS will become really interested in why you’re not returning a profit but manage to stay in business.

2. Late filing and late payments

Not meeting deadlines is against your obligation and will create unwanted attention on your business, along with additional money (penalties) that will need to be paid. Always try to pay on time or at least inform the IRS that payment will be late.

3. Shareholders who are also employees getting paid big salaries

All employees should be given reasonable salaries based on their; skills, type of industry, and experience. Paying excessive salaries simply because they’re shareholders is a surefire way to the IRS wondering what else you may be up to.

4. Prodigious Deductions for entertainment, food, etc.

The best way to prove that your deductions are accurate consists of keeping all receipts. If receipts and extensive documentation isn’t available, that automatically makes you look guilty in the IRS eyes. Especially since this is a very common method individual used to get out of paying taxes.

5. Transferring income to tax exempt organizations such as nonprofits

This is a form of tax evasion in its finest form. Giving away money to charities isn’t an issue. However, it becomes an issue when it’s solely for the purpose of getting out of paying taxes on it. The IRS will be more than happy to send an audit your way and see if your “charitable” donations check out.

6. 100% Vehicle Business Use

Again, the IRS wasn’t born yesterday. Deducting money for business vehicle use is one of the oldest tricks in the book. If the vehicle isn’t designated for complete business use, it’s good to keep logs of mileage and the purpose of each trip.

7. Majority Cash Businesses

This is where places like car washes, barbershops, and bars have to be really careful. No matter what precautions you take, you’re always going to be under the magnifying glass of the IRS due to the easiness of hiding and underreporting income.

Small business owners are already up to their necks with busy work. However, it is important to document everything you do and keep receipts. You can even potentially create a system that only important files for compliance are uploaded to.

The last thing you need is the IRS knocking at your door for an audit. If you do receive a notice, do not ignore it as some businesses do. It’s in your best interest to contact a tax lawyer. Although these steps do not guarantee the IRS will audit you, it doesn’t hurt to try your best to prevent the hassle.

Telephone Number: (310) 498-7508
[email protected]