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WOTC Tax Benefits

What is Work Opportunity Tax Credit? How Employers Can Benefit from the Same?

The Work Opportunity Tax Credit (WOTC) is a federal tax credit that businesses can use to offset the cost of hiring people from specific target groups who have consistently encountered significant barriers to employment. WOTC initiatives help to improve workplace diversity and make it easier for all citizens to acquire decent jobs.

The Consolidated Appropriation Act, 2021 authorized the extension of the Work Opportunity Tax Credit until December 31, 2025. This means taxpayers can claim the credit on or before Dec 31, 2025, for such eligible hiring. Needless to say, WOTC is only for one time per employee and cannot be claimed for re-hired.

Eligible Businesses for WOTC

There is no specific limit on business size to be eligible under this scheme. Any size of business is eligible for the work opportunity tax credit if it hires candidates from qualified groups. This credit is available to both taxpayers and certain tax-exempt employers operating in the United States and some U.S. territories. Basically, the employers must fall under the below criteria as

  • Taxpayers that can claim the credit against income taxes
  • Tax-exempt employers can claim the credit only against payroll taxes and only for wages paid to members of the qualified veteran targeted group.

Target Groups Qualified under WOTC

Any employers can claim WOTC for the below-targeted groups under section 51 of the Code. The employee must be a certified member of any one of the following groups to proceed with the claim.

  • Veterans
  • Recipients state assistance under part A of title IV of the Social Security Act (SSA)
  • Individuals who have previously served time in prison or who have been convicted of a felony
  • People who live in empowerment zones or rural renewal counties
  • Individuals who have been referred to an employer after completing a rehabilitation plan or program
  • People whose families receive supplemental nutrition assistance under the Food and Nutrition Act of 2000
  • Recipients of supplemental security income benefits under title XVI of the SSA
  • Individuals experiencing long-term unemployment

How much can be claimed?

The amount of tax credit under the WOTC program varies based on the employee’s target group, total hours worked, and total qualified wages earned. For instance,

  • If the qualified employee has worked for at least 400 hours and is still in the first year of employment, WOTC is equal to 40% of up to $6,000 wages paid or incurred with a maximum credit of $2,400 for an employee
  • If the eligible employee has 120 to 399 hours of service, then a 25% rate applies to wages
  • Up to $24,000 in wages may be considered in determining the WOTC for certain qualified veteran targeted group

 Procedure to Claim WOTC

Taxpayers and Tax-exempt organizations can apply through different IRS Forms to claim WOTC. But all need to complete Form 8850 which is a Pre-Screening Notice and Certification Request to certify that the employee is qualified under the target group. These documents must be submitted to the State Workforce Agency not the IRS within 28 days of the new employee’s start date. Once the State Workforce Agency certifies the employee, Taxpayers can file Form 5884 (Work Opportunity Credit) and tax-exempt employers file Form 5884-C (Work Opportunity Credit for Qualified Tax-Exempt Organizations Hiring Qualified Veterans) to claim the WOTC.

IRS Audit Group is a Tax Audit Representation Firm in Los Angeles, California. Our Tax professionals act on the behalf of the taxpayer during an IRS audit. The IRS audit process can terrify some taxpayers but the Taxpayer Bill of Rights states that individuals can seek help from an IRS tax representative like us to represent them during the IRS audit. Don’t Panic, if you have received a mail for IRS Audit but act fast by contacting us immediately for the next step.

https://irsauditgroup.com/contact/

Toll-Free: (888) 300-6670

Emergency Number: (310) 498-7508

Email address: [email protected]

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IRS deadline Blog 2022

Did you Miss IRS Tax Filing Deadline for 2022? Here Is What You Need to Know Now

The IRS tax filing deadline has ended for most individual taxpayers for the season 2022. In case, if you have not done the tax filing by the end of the deadline which was on April 18, 2022, it is important to know the consequences as well as other options. People who qualify for tax exempt or who don’t owe taxes will not receive any penalties and interests. But it is different for those who have the liability to pay tax. They need to file tax return as soon as they can do it in order to reduce penalties and interest.

For the tax season 2022, IRS advised that individuals who owe taxes need to file returns and pay as much as possible on/before Jun 14, 2022, to avoid hefty fines. It also recommended to use the electronic filing options for faster processing. Similarly, the fastest and easiest way to pay the taxed is with IRS Direct Pay.

IRS Late Filing Penalty Structure

Missing the deadline of June 14 will typically result in a failure-to-file penalty, which is also known as a minimum late filing penalty. The minimum fine is $435 or 100% of the unpaid tax, whichever is smaller, if the return is more than 60 days late. If the taxpayer owes $435 or less in taxes, the penalty will be equivalent to that amount. The minimum fine will be at least $435 if they owe more than that.

Under the normal calculation, this penalty is 5% of the unpaid tax for each month or part of a month that the return is late, up to a maximum of 25%. Once the taxpayer files return, the late filing penalty will no longer be charged. In addition, once the tax is paid, the separate late-payment penalty and interest will also stop growing. None of these costs need not be calculated by the taxpayer. The IRS will instead send them a bill for any overdue sum.

Late Filing Options for Tax Season 2022

Even if the taxpayers have not filed the returns before the April deadline, they can do so electronically through Free-File service. Those who qualify can avail this free-file service until October 17, 2022. If you are not eligible for IRS Free File, then you can e-file using Free File Fillable Forms. The IRS paper forms used in this option are electronic counterparts. It helps individuals who are comfortable filing their own taxes where the e-filing does the part of the math.

Sometimes, taxpayers may miss the deadline because they were not able to pay the taxes, which in case they can opt for payment plan with the IRS. The best way to apply is to use the IRS Online Payment Agreement tool. Once the online process is complete, you’ll receive immediate notification of whether the agreement is approved. IRS provides two types of online payment plans as follows

  • Short-term payment plan: If the entire amount owed, including taxes, penalties, and interest, is less than $100,000 and the payment period is 120 days or less.
  • Long-term payment plan: If the total amount payable for the tax, penalties, and interest is less than $50,000 and the payment period is greater than 120 days. If IRS approves long-term payment plan, a setup fee can be charged depending on the taxpayers’ income.

If you are not eligible for an online payment plan, you may also request an installment agreement by submitting Form 9465, “Installment Agreement Request”, with the IRS. If the IRS approves your IA, a setup fee may apply depending on your income.

Can You Avoid the Penalties?

The penalties for late filing, late payment, and interest on unpaid taxes pile up quickly, so it’s crucial to file as soon as possible. A taxpayer who files after the deadline can, however, under some circumstances, be eligible for penalty relief. Those who received a penalty may call the IRS at the number listed on their notification and explain why they were unable to file and pay on time.

Administrative penalty reduction is frequently available to taxpayers who have a history of timely filing and payment. Generally, a taxpayer is eligible if they have been timely filing and paying taxes for the last three years and meet additional criteria.

IRS Audit Group is a Tax Audit Representation company in Los Angeles, California with a team of Tax Professionals, CPAs, Enrolled Agents, and Tax Attorneys. They are primarily specialized in IRS Audit Representation. We provide free consultation to understand your tax problems. Contact us: https://irsauditgroup.com/contact/

Toll-Free: (888) 300-6670

Emergency Number: (310) 498-7508

Email Address: [email protected]

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Qualified Opportunity Fund and Tax Filling - 2022

Qualified Opportunity Fund and Tax Filling – 2022 Tax Filing Guidelines for Qualified Opportunity Fund

Qualified Opportunity Fund (QOF) is an investment vehicle formed as a company or partnership with the goal of investing in property within Qualified Opportunity Zones. This program was formed per the 2017 Tax Cuts and Jobs Act to provide a tax incentive for private, long-term investment in economically distressed communities. There are thousands of low-income communities in all 50 states, the District of Columbia and five U.S. territories that are designated as Qualified Opportunity Zones. Taxpayers can invest in these zones through Qualified Opportunity Funds. This type of opportunity funds assists taxpayers in giving tax advantages and rewards to investors.

Certain types of businesses cannot be included in opportunity funds, even if it falls within opportunity zones. Following are types of business which are not included in opportunity funds.

  • Golf courses
  • Country clubs
  • Massage parlors
  • Hot tub facilities
  • Suntan facilities
  • Racetracks or other facilities used for gambling
  • Liquor stores

Eligibility Criteria

To certify and maintain a Qualified Opportunity Fund, an entity must:

  • Be a partnership, corporation, or LLC that is treated as a partnership or corporation, and it must have filed a federal income tax return;
  • Be organized for the purpose of investing in Qualified Opportunity Zone property under the laws in one of the 50 states, the District of Columbia, a U.S. possession, or a federally recognized Indian tribal government: and
  • Hold 90% of its assets in Qualified Opportunity Zone property.

IRS Form Required to Certify as a Qualified Opportunity Fund

The entity must file Form 8996, QOF, with the qualifying partnership or corporation’s federal tax return each year to attest and retain its status as a Qualified Opportunity Fund. The entity must file Form 8996 by the due date for 2022 tax return (including extensions).

Form 8996 is used to:

  • Certify the corporation or partnership is organized to invest in Qualified Opportunity Zone property.
  • Report that it meets the 90% investment standard of section 1400Z-2.
  • Figure the penalty if it fails to meet the 90% investment standard.

Benefits to the Taxpayers

The QOF basically provides tax deferral to the capital gains if the taxpayer elects to do so. The basis in the QOF investment becomes zero when one elect to defer the gain. The longer the investment in the QOF, the higher the basis grows. The tax benefit received is determined by the length of time one retains the Qualified Opportunity Fund investment. For instance

  • After five years, a taxpayer who defers gains through a Qualified Opportunity Fund investment obtains a 10% step-up in tax basis
  • It will be followed by another 5% step-up after seven years. Note that the taxpayer must have invested before December 31, 2019, to receive the entire 15% step-up in tax base. The taxpayer will have held the investment in the fund for seven years when the tax is triggered at the end of 2026, thereby qualifying for the 15% increase in tax basis.
  • If the taxpayer holds the investment in the QOF for at least 10 years, then such taxpayer may be able to permanently exclude gain resulting from a qualifying investment when it is sold or exchanged.

A team of tax attorneys from IRS Audit Groups helps taxpayers in filling their IRS return for 2022. We are certified tax lawyers who represent taxpayers during any IRS audit. We can resolve common tax problems to complex audit sessions to help comply our clients. Get free consultation by calling or filling the enquiry from our website below

https://irsauditgroup.com/contact/

Toll Free: (888) 300-6670

Emergency Number: (310) 498-7508

Email address: [email protected]

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Gig Economy Tax Guide 2022

IRS Tax Guide for Gig Economy – File Tax Returns Under Gig Economy

IRS defines a “GIG” economy as sharing economy where individuals earn income by providing on-demand work, services, or goods per the flexibility of both parties.  It often involves a digital platform like a website or mobile application.  Examples include ride-hailing apps, food delivery apps, and holiday rental apps.  It’s a growing segment, bringing economic benefits of productivity and employment.

Who has to File Tax Returns Under Gig Economy?

The gig economy is taxable.  Taxpayers need to report the income in their filings, even if the income is.

  • From part-time, temporary, or side work,
  • Not reported on an information return form – like a Form 1099-K, 1099-MISC, W-2, or other income statement or
  • Paid in any form, including cash, property, goods, or virtual currency.

Tax Slab for Gig Workers

A gig worker who is primarily dependent on the Gig Economy needs to consider taxes to be paid as a self-employed taxpayer.  They need to file tax returns for 2021 if their income from self-employment equals or exceeds $400.  Therefore, it is important to keep a record of all receipts to track income, deduct expenses, and complete tax returns.

How to File Your Income Tax Returns as Gig Workers?

Independent contractors or Gig workers, whether it is a full-time, part-time or side job, need to file their tax returns for 2021 using the below forms.

 In case the filed tax return needs to be modified, use Form 1040-X, Amended U.S.  Individual Income Tax Return.

IRS provides various options to guide the taxpayers in filing their returns.  Below are a few options that can be utilized by any individuals

IRS Audit Group is a Los Angeles-based Tax Audit Representation firm that helps in resolving common tax problems and provides points of clarification on issues such as tax relief, tax fraud, California state tax issues, and other tax debt-related circumstances.  Our certified tax attorneys help taxpayers in facilitating their filings as well as after filing issues like IRS audits.  Contact us to get a free consultation from our staff members to help us understand your problems.  Email: [email protected], Phone: 1-888-300-6670

https://irsauditgroup.com/contact/

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Child and Dependent care Tax filing guide

Child and Dependent Care Credit for Taxpayers in the Tax Filing 2021 and Advance Tax Credit Payment

The ‘child and dependent care” in the tax system are applicable if the taxpayer paid expenses for the qualifying dependents during a financial year.  The eligibility criteria are listed separately.  This tax credit can be claimed in tax filing by taxpayers under the applicable situations.  

If the taxpayer is a parent or caretaker of a disabled dependent or spouse, they can save the expenses while claiming in this tax filing 2021. For the tax year 2021, the credit is fully refundable. This means that an eligible family can get it, even if they owe no federal income tax. 

 

Eligibility of Child and Dependent Care Credit

  • Taxpayer’s dependent who is under age 13 when the care is provided,
  • The spouse who is physically or mentally incapable of self-care and lived with the taxpayer for more than half the year, or
  • A person who is physically or mentally incapable of self-care, lived with the taxpayer for more than half the year and either: 
    1. is your dependent; or 
    2. Could have been your dependent except that 
      • he or she is over the gross income limit of $4300 
      • or files a joint return, 
      • or you (or your spouse, if filing jointly) could have been claimed on another taxpayer’s return.

 

Qualifying Claim Amount of Claim and Child and Dependent Care Credit

For 2021, taxpayers can claim the credit for up to $8,000 of expenses for one qualifying person or $16,000 for two or more people. The percentage of expenses you can claim ranges from 0% to 50%, depending on your adjusted gross income (AGI). You can claim the maximum percentage (50%) of expenses if your AGI is $125,000 or less. So, for example, if your AGI is $75,000 and you had $8,000 of expenses for one qualifying person, the tax credit would be worth $4,000 (50% of $8,000). The tax credit starts to phase out if your AGI is above $125,000 and disappears entirely at AGIs above $438,000. For more details, refer to IRS official website below

https://www.irs.gov/newsroom/irs-highlights-importance-of-child-and-dependent-care-credit-can-help-families-others

 

How to Claim Child and Dependent Care Credit

To claim the credit, taxpayers must fill out Form 2441 and include it with the federal tax return. Further, a valid taxpayer identification number (TIN) for each qualifying person, as well as the names, addresses, and TINs for the people and organizations that provided care for your child, spouse, or dependent must also be included.

According to the IRS, since the advance child tax credit payments cannot be counted as income, federal, state, or local agencies can’t use the amount when determining if you or your family are eligible for other benefits or assistance.

 

Advance Child Tax Credit payments

Advance Child Tax Credit payments provide an option to claim the credits early from the estimated amount of the Child Tax Credit. Taxpayers can claim up to 50% of the estimated credit that you may properly claim on your 2021 tax return during the 2022 tax filing season. 

Going through different forms and documents is always a hassle for taxpayers especially when the deadlines are nearing. IRS Audit Group in Los Angeles facilitates your tax filing through its certified IRS attorneys. Get a free consultation with one of our staff members to help us understand your needs. Call us on 1- -888-300-6670 or email us at [email protected].

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How to Approach Sales Tax Audit – Tips from IRS Audit Group Newport Beach

Tax

To deal with budget shortfalls, state governments revenue agencies continue stepping up their efforts in raising revenue through sales tax audits.

You never ask for it, but you have been selected for and will be notified of a sales tax audit. At that point in time you may get confused – What should you do and what you should not? Most companies are not regularly audited by the state for sales and use tax purposes, so it is unlikely you have previously handled an audit. While the requested lists of records and documents that will be reviewed appear straightforward, there is much more to handling a sales tax audit. There are a lot of potential pitfalls during the interaction with auditors that may occur as you address the questions they typically ask.

Here are a few tips to Manage Your Sales and Use Tax Audit from IRS Audit Group Newport Beach. The best practices as listed below need to be considered in such situation.

Hire an external representative tax expert. IRS Audit Group Newport Beach has a pool of experts specializing in State Sales Tax matter. Once you are identified for audit, it is better to initiate communication with experts. They can discuss the audit process with you, provide some background on various sampling methods, and provide insights on specific industry issues targeted by the state. Also, make them aware of the initial schedules vs. revised schedules.
Ask your tax expert from if it is appropriate to perform a refund study or reverse audit at the same time to identify potential opportunities for refunds. IRS Audit Group Newport Beach can provide immediate solutions to such questions.
Do not engage in contingent fee arrangements on questioned items by the auditor unless you have already made the first pass. Otherwise, you may be paying them on reductions for errors made by the auditor or obvious exempt transactions.
If sales state tax auditors are doing a refund study/reverse audit, their fee should not be based on savings in periods outside the audit period. Their fee should always be based on offsets actually granted by the state. Payment should be made at the end of the audit, or a provision should be included to reverse any offsets not allowed.
A sales tax audit is not an ordinary occurrence. Therefore, you need to invest the proper efforts internally or with external assistance from experts like IRS Audit Group Newport Beach.

Lastly, be ready to play defence. Do not assume all questioned sales and purchases are taxable. Familiarize yourself with the regulations of your state with the help of expert advice from IRS Audit Group Newport Beach. Once you are convinced that questioned item should not be assessed, go ahead and challenge it. Also, understand any sampling techniques employed by the auditor, and be sure samples used are representative of your operations. If you have not experienced a sales tax audit before, and unfamiliar with your state’s regulations, or you have identified significant problem areas in your self-review, you may want to consider engaging a tax advisor to assist in your defence.

IRS Audit Group Newport Beach professionals are knowledgeable and experienced in assisting companies undergoing state sales and use tax audits as well as conducting overpayment reviews. Let IRS Audit Group Newport Beach help you navigate the audit landscape.

 

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Defending State Tax Audits – IRS Audit Group Beverly Hills

State Tax Audits

Getting an audit notice from the state department of taxation used to be a scary experience. The IRS isn’t the only government agency that can send you a notice about your taxes. Agencies such as the California State Tax Audit, and the Board of Equalization can also inquire about the taxes you filed. The law places the burden on you to demonstrate that your state income tax return information is correct.

It is always unpredictable when it comes to getting an audit notice or an examination by the IRS. However, plenty of help is available by contacting experienced tax relief attorney like IRS Audit Group Beverly Hills to deal with the taxation authorities on your behalf.

How the State Taxation determines and What State Taxation Authority looking for in a Tax Audit?

State Income tax audits are done primarily as office audits. State taxation authorities use tax audits to determine if you properly reported your income, deductions, exemptions, and credits in your income tax filing. They may request you to provide supporting records in person, on phone, or by mail to prove that your filing is correct.

Auditors cross-match state and federal return data verify that all income reported on information returns has been included on the state return, that deductions taken on the state return are valid, adjust based on audits conducted by the Internal Revenue Service, and conduct domicile investigations.

State Tax Audit Defence Lawyer from IRS Audit Group Beverly Hills
Being selected for a state tax audit is not necessarily an indication of any tax fraud. Even if you don’t have any unfiled tax returns, and are certain that all information you have provided to the state taxation authority is correct, still you may get audited. The state tax auditor seeks to uncover honest record-keeping mistakes, as well as possible tax fraud. It is important to understand that any information you provide to the state tax examiner can and will be used against you.

It is always a good idea to be represented by a tax lawyer provided by from IRS Audit Group Beverly Hills, who understands how to deal with the state taxation authorities in a tax audit.
As an experienced tax attorney from IRS Audit Group, Beverly Hills will explain the standard procedure in a state tax and also elaborate their process to verify the accuracy of a taxpayer’s returns.

Hence, protect your rights by being represented by a tax attorney from IRS Audit Group Beverly Hills, who understands your situation, as well as state and federal tax code. The first and the best thing you can do in the event of a state tax audit is to invoke your right to legal counsel before answering any questions or providing any documentation regarding your case.

What Happens if the State Tax Auditor Uncovers Items which you Cannot Substantiate?
Even if the state tax auditor determines that you owe back taxes (plus any interest payments or penalties that may have accrued), there are several avenues that your tax attorney from IRS Audit Group Beverly Hills can help you. Depending on the situation, your attorney can help you to set up a tax payment plan, negotiate an offer in compromise, seek a penalty abatement or currently not collectible status, or file a state tax appeal.

If you have received notice of examination or documentation from the state taxation authority informing you of your rights during the state appeals process, you should act quickly to obtain legal tax representation. Contact RS Audit Group Beverly Hills California for a free initial consultation today at 1-888-300-6670.

 

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Why it is Important to Pay Taxes

 

IRS Tax

Source: Pexels

Tax is a compulsory payment or contribution made by citizens of a country to the government for the general benefit of the society in which they live.  We pay taxes at different level viz., federal, corporate, state, and municipal/local governments enact tax laws.

Why taxes are important for economic growth

It is a fact that governments need sustainable funding for social programs, and public investments to promote economic growth and development.  Such programs provide health, education, infrastructure, and other amenities which are important to achieve the common goal of a prosperous, functional and orderly society. Moreover, there is an obligation on the part of the government to maintain the stable economy. Generally, wild fluctuations in prices are harmful to the economy of a country.   Declining prices for example, as witnessed during the Global Financial Crisis, causes depression which leads to a fall in company profits, saving, investments, employment and the Gross Nation Product (GDP).  Conversely, constant rising price creates problems of discouraging savings and further weakens incentives to improve efficiency on the part of entrepreneurs.   In order to support the government program, there is a need to raise revenues from potential sources, and Internal Revenue Service (IRS) is one such agency to manage tax collection.  IRS is the revenue service agency of the federal government and is part of the Bureau of the Department of the Treasury.

Tax collection or payment is not merely a payment against availing public and services.  It is a key ingredient of the social contract between citizens and the country.  By paying tax you are contributing to nation building as well you are creating a record about your financial activities.  This will help you to improve your creditworthiness in order to process your request for financial assistance/loan from public agencies.

Here is a quick glance over how tax payment plan of federal, state, and local governments utilized.

Federal

  • Largest national expense is payments to seniors for Social Security.
  • The next largest service is defense. That includes support agencies like Homeland Security and the Veterans Administration.
  • The third largest service is Medicare. Payroll taxes only cover 60% of these expenses.  Like Social Security, you are paying for services you’ll receive after you turn 65.
  • Medicaid is the fourth largest service. You only receive this if your income falls below a certain level.
  • Other welfare and government retirement programs.
  • All other government agencies include Health and Human Services, Education, and NASA.

State

  • The largest state expenditure was for social services, including Medicaid, welfare, and public housing.
  • Most of this was for employee retirement, education, transportation, and health and hospitals.

Local

  • The largest local expenditure for education and libraries.
  • Water and sewer services cost Administration toward retirement, but many cities are underfunded.
  • Local government paid police and fire services, transportation, and health and hospitals.
  • Welfare and public housing cost and parks.

Conclusion

Taxes ensure that government can build and maintain the necessary infrastructure – education, healthcare, transportation systems – to attract investment and businesses, and thrive in a competitive global economy and allow citizens, residents and businesses to do things together that we could never do on our own.

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Upcoming Tax Deadline

If you’ve requested a six-month extension to submit your taxes then your deadline is coming up quick! October 16, 2017 is the last day to file your individual or corporation return. This includes the 1040, 1040A and 1040EZ or 1120 tax forms. Beware of penalties for late payments or filing.

Don’t let this extra time go to waste. Be sure that you file your return immediately and see if you qualify for common credits and deductions. Low and moderate income families may be eligible for special tax benefits as well.

According to the IRS, you could also receive credit if you’ve paid college tuition or fees in the last year. Same goes for those that have made their homes energy efficient.

E-filing will reveal guides and tips to help you complete your return, but you can also call us for a one-on-one consultation with a tax professional. If you’ve missed important deadlines in the past or fear you won’t get the paperwork done in time for the upcoming deadline please give IRS Audit Group a call to learn how we can help resolve your tax issues ASAP.

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IRS Audit Group

Tax attorney in Beverly Hills, California

468 N Camden Dr #200,
Beverly Hills, CA 90210, USA

Call: +1 888-300-6670

Hours

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