How to Abate an IRS penalty

There are a lot of different types of penalties IRS can assess. Let’s start with the failure to file. 

Typically, it’s a firm deadline and when you have to file a return. If you don’t file an extension and your return is late, or you do file the extension and your return is late, you’ll get a notice from the IRS that you have a late return. Even if you have a good excuse you will have to substantiate it with documents and evidence of reasonable cause.   

Some examples of excuses that don’t work on the IRS:

Saying your CPA promised to file the return on time and they missed the deadline. Simply indicating to the IRS that you had a CPA that missed a deadline is not enough, because IRS feels that it is your responsibility, not the CPA’s to know when to file the return.  If it’s something more of a technical nature and you file the return with an error on it, and it’s really more of a legal question or super technical tax question, if you get a penalty for that for misreporting something, you might be able to argue reasonable cause because you relied upon a tax professional. Get a letter from your CPA, tax attorney, or whoever gave you the advice in question, and IRS will then consider that and potentially, abate the penalty  

What does it mean to abate a penalty? 

Removing the penalty in the terminology of the IRS is abating the penalty. When requesting penalty relief, that is what you want to ask for, “penalty abatement”.  Missing a filing deadline is very difficult. We had a client for whom we were able to get an abatement fro for a missed deadline, but you really have to show that even though you took all reasonable measures and acted like a prudent person, you still couldn’t meet the deadline.  There have been cases of people that have been incarcerated, out of the country, and a number of other excuses that do not qualify. Because you can always file a tax return with the US Embassy in a foreign country.   

Carefully consider what the facts are and respond to the notice even if you don’t have a good reason for your missed deadline. 

  Always be truthful, gather your evidence, provide your documents. Third-party records are better if somebody can substantiate,your evidence with a declaration or a note from that person.  Be sure to respond within the correct timeframe. In the notice, it’ll indicate how much time you have to respond. It’s typically 30 days, but it could be as short as 15 days or even less. Different penalty notices have different deadlines. Make sure you don’t miss that deadline on top of the missed deadline for which you have been assessed a penalty.   

Asking for more time from IRS 

If you got the letter or notice late, or you just are unable to gather the evidence in time but you really do want to respond, you can write a letter to the IRS requesting an extension to respond to the penalty notice. The extension is not guaranteed, IRS can still deny your request and assess the penalty. But if you are in a bind, and you want more time, it can’t hurt to request additional time. Typically they will grant you an extension.   

Keep supporting evidence of correspondence

Post-COVID, IRS is so far behind on mail that they might actually generate a notice indicating you didn’t respond to the penalty letter and assess it to you, even though you did send a letter before the deadline. So be cognizant of that and register the mail you send, take a time-stamped picture of the correspondence or find a fax number. Faxing to the IRS is the quickest way for them to get the notice (don’t forget to keep your fax confirmation). Whether you respond to the penalty notice or you ask for additional time, send a certified US mail with a return receipt as well as a fax. And if you don’t have a fax number on the notice, you can contact IRS directly and ask them if there’s a fax number for the department that generated the notice.   
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The nuances of tax law can be tricky to navigate and failure to comply with tax law in San Diego can have dire financial and legal consequences. Whether you need assistance during an investigation, want to protect yourself from an IRS or EDD audit, or simply have questions about corporate tax law in San Diego, it’s always best to seek legal advice especially from a San Diego tax attorney.

Our compassionate and skilled legal staff at Milikowsky Tax Law have more than a decade of experience in tax law and as former business owners or key executives. That means we can offer the ultimate San Diego legal tax support for audits, whether that’s helping you navigate a San Diego EDD audit or stay compliant with EDD policies.

Your San Diego Tax Attorney

If your business is under examination by the State of California’s EDD or the IRS, and you need to defend yourself against allegations of wrongdoing or mistakes, we can help. We’ll even provide your first meeting free of charge.

Our services extend all the way from dealing with IRS audits, to making sure that you’re getting the most out of your tax returns. As your local San Diego tax attorney, we are here to protect you and your business by minimizing your legal tax risks.

Navigating Tax Law in San Diego

Each state has unique factors to analyze for issues that arise in an EDD audit, such as whether a worker is properly classified as an independent contractor. Our attorneys and staff have extensive experience in resolving San Diego EDD audits as well as other audits with IRS and California FTB.

Your Milikowsky Tax Law attorney will work on your case with the utmost care to help you minimize your risk and keep you in compliance. After all, we understand how detrimental a tax investigation can be.

With Milikowsky Tax Law, you work with a trusted San Diego tax attorney who can:

  • Analyze tax returns to minimize potential errors
  • Support you in understanding your legal risks before you file your tax return
  • Represent you in state audits and IRS tax investigations
  • Assess and implement strategic appeals to audits and US tax court cases
  • Develop legal theories that keep your company running smoothly during and after an investigation

We pride ourselves on giving our clients the best support available in San Diego. Nearly all of our clients are referred by CPAs, attorneys, and other professionals. We’ve even designed our own proprietary audit metric technology, which uses state-of-the-art analytics to help resolve the most complex audit issues.

If you have issues or concerns surrounding tax law in San Diego, let an experienced San Diego tax attorney from Milikowsky Tax Law provide professional tax guidance to protect the businesses you serve. Call us today to schedule your free first meeting.

How the passage of this Federal Act would affect criminal convictions and tax liabilities.

The MORE Act was passed on April 1st by the House of Representatives and is intended to go to the Senate.

At the time of this posting it is unclear whether the Senate will pass this with a majority vote.

What is the MORE Act and what does it change?

What the MORE Act aims to do is decriminalize and remove c*nnabis from the Controlled Substances Act.  This Act leaves the decision to the States as to how they choose to regulate that substance. Currently, some states have already approved their own MORE Acts or similar such as California, and Colorado.

Other interesting details about the MORE Act

The MORE Act will pose an excise tax of 5% that could be increased to 8% over the next several years.

Anyone who has a nonviolent, federal cannabis conviction dating back from 1971 to the present can have their record expunged simply by filing a motion in Federal court.

Related Dangers

Until the Federal Law aligns with state laws there are tax complexities for businesses who are paying taxes in their state but not paying Federal taxes because their business is not legal Federally.

If you have tax complexity around this industry, please get in touch with our California-based team at Milikwosky Tax Law 858-293-8755

What is the MORE Act?

At Milikowsky Tax Law, we keep businesses in business. 

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Meet Milikowsky Tax Law: Your Team of Orange County Tax Attorneys

The highly experienced team at Milikowsky Tax Law is ready to support businesses and business owners in Orange County. We have over 10 years of audit experience representing companies and their owners before IRS and California tax agencies.

Many of our legal professionals are experienced business owners and decision makers themselves. This means we understand the complexity of tax law in Orange County and the nuances of filing taxes in California — we also know firsthand what it takes to protect and grow a company. That means you can take care of running your business and we’ll take care of defending it.

We combine extensive knowledge of tax law in Orange County with unique audit metric technology that applies sophisticated analytics to each IRS or State of California EDD audit. With our help, an investigation doesn’t have to mean the end of your business.

Navigating Tax Law in Orange County

Whether you have questions about the California tax code, or you need to defend yourself against an audit or criminal investigation, Milikowsky Tax Law is here for you.

We have extensive experience developing legal theories and appeals related to payroll tax, income tax, and sales tax matters in civil and criminal cases. Our services include:

  • Helping you understand the complexities of your tax returns
  • Analyzing your tax returns to minimize potential errors
  • Supporting you through an Orange County EDD audit
  • Representing you in the case of California state or IRS investigations
  • Ensuring that your business can run smoothly during and after an investigation

What’s more, the first meeting you have with your Orange County tax attorney will be completely free of charge.

Don’t let the tax law in Orange County threaten your business or add extra stress to your busy life. Enjoy the confidence and peace of mind that comes with having an experienced local attorney by your side. Contact Milikowsky Tax Law now to schedule your free first meeting.

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SAN DIEGO CRIMINAL TAX LAWYERS

HAVE YOU BEEN THE TARGET OF TAX CRIME INVESTIGATION?

If you believe that you have exposure for a criminal tax matter, then you must speak with our San Diego tax lawyers immediately. Tax evasion, the most well-known of tax crimes under the Internal Revenue Code, is a felony. Tax evasion is known as the willfully trying to avoid or evade any previous taxes that have been imposed by Title 26.

Factors of a prima facie (Latin expression meaning first encounter or first sight) case are:

  • The presence of a previous tax deficiency
  • An act constituting as an evasion or attempted evasion of the previous tax hit
  • Willfulness behind the invasive actions committed

Even if fraudulent concealment is established, a defendant may not be convicted of previous tax evasion unless an additional previous tax is actually due. Additionally, without evidence of intent, failure to file a tax return by itself does not mean that you have actually evaded tax responsibilities.

If you are the target of investigation or if you suspect that you may be under internal investigation, you must speak with a skilled San Diego tax attorney at Milikowsky Tax Law.


COMMON TYPES OF FEDERAL TAX CRIMES

The law enforcement branch of the IRS is the IRS Criminal Investigation Division (CID). If you are under investigation for possible tax crimes, then you could be facing serious penalties, including criminal prosecution under felony penalties.

Federal tax crimes may include:

  • Tax evasion
  • Tax fraud
  • Failure to file
  • Money laundering
  • Failure to collect employment taxes
  • Conspiracy
  • If you receive a call from a special agent from the IRS CID, you must always assert your right to an attorney. Do not assume that you have to answer any questions. You have the right to remain silent and you should always consult with your lawyer before speaking with any type of federal investigator.

Anytime the IRS tries to make contact with you, this may be a sign that you are currently under investigation by the IRS. It will be crucial to act quickly and retain an experienced and hard-hitting attorney who can fight on your behalf.

IRS BADGES OF FRAUD

Typically, the Internal Revenue Service (IRS) looks for specific “red flags” that may suggest tax evasion or other forms of tax crimes. The IRS may accuse someone of fraud from what are commonly referred to as “Badges of Fraud.”

The badges of fraud include the following acts:

  • Understatement of income or failure to report all income
  • Failure to keep adequate records
  • Implausible / inconsistent explanations of behavior
  • Hiding assets
  • Non-cooperation with tax authorities
  • Concealing illegality
  • Dealing in excessive amounts of cash
  • Failing to make estimated tax payments


The IRS has also published a list of various categories of IRS indicators of fraud.

CALL MILIKOWSKY TAX LAW FOR A CONSULTATION

We are an international law firm with a thorough and comprehensive understanding of tax law. Completely founded on unwavering client commitment, our firm has been devoted to serving the best interests of the men and women we represent. If you are in need of hard-hitting legal advocacy in San Diego or another surrounding area in Southern California, please do not wait to consult our firm.

Contact our skilled San Diego tax lawyers today to learn how we can help you!

We are also opening a new office in Tel Aviv, Israel to serve international clients!