Tax Lawyers for Bakersfield
Life is full of surprises. In our society today, the truth is separated by a thin line and may not be easily distinguished. It happens quite often that a tax controversy with the Internal Revenue Service or a state tax attorney cannot be avoided. In situations like these, it is imperative that the individual whom has encountered the tax controversy is represented by a knowledgeable and well-versed tax litigator whom has years of experience in the field. A good tax lawyer can be identified by many common traits – extensive experience in tax law, tax procedure and winning tax cases, experience in handling cases involving corporate deficiency and refund litigation, and experience with representation of taxpayers in the Court of Federal Claims, the U.S Tax Court, and Federal district courts across the country.
In some instances, the dollar value of the issue is too large for the taxpayer to settle, there might be irresolvable disputes about the facts of the case, or each party might simply have a different view of the actual definition of the applicable law. In any case, the first step to successfully winning a tax dispute is to locate a good tax lawyer or tax litigator, one who knows the processes and procedures and will whole-heartedly endeavor to seek the truth. There are many various types of state and federal tax litigation methods that are utilized by lawyers. We will be analyzing and reviewing the most effective of these, and how they work as part of the entire process to ensure that you are well aware of the rules and regulations behind the legalities.
Overview of Tax Litigation
Of all the different areas of law that exist, Tax Litigation may be considered as one of the most highly technical and unique of the lot. There are many different types of litigation, and the opposing parties in each case may be different – a company, an individual, or a firm. But in the case of Tax Litigation, the opposing party is always the same – it is the IRS which you are up against. The types of issues which are experienced in regards to Tax Litigation may sometimes involve estate, income, or employment taxes which are contained, governed, and documented within the Internal Revenue Code, which has thousands of pages. This is one of the reasons why a tax litigator must have an ability to not only decode and analyze the numerous technical tax laws which exist, but they must also be proficient in oral and written advocacy in order to champion the client’s position. To make things even more complicated, even a simple tax dispute can have an irregular lifespan, lasting from a couple of months to in some cases – ten years or more. In order for us to understand all the facets involved with tax litigation, we must first be familiar with the different phases which comprise the life of a tax dispute. Therefore, it is critical when planning a strategy for successful resolution of a tax dispute to always communicate with and seek counsel with your tax lawyer on a regular basis.
The Auditing Phase
One of the first things to happen when a tax dispute is filed is for an audit to be conducted by the IRS. The process for this is for them to check your federal tax return and see if there are any discrepancies to be found regarding the items of expense and your income as reported, and how much money you’ve actually paid towards your taxes. You may be surprised to know this, but many large corporations must undergo routine audits based on a cycle set by the IRS, and each cycle may include multiple tax years. An IRS agent may issue a Form 4564, which is an Information Document Request. This is a request for tax documents and other important information from you, which will be examined in detail by the agent. After the completion of the audit, one of four outcomes may be determined –
1: The agent finds no issues with the taxpayer’s return, and will not propose any changes;
2: The agent may propose a change to the taxpayer’s return and it is agreed upon by the taxpayer;
3: Same as number 2, but the difference is that the taxpayer does not agree to the propositions set forth by the agent; and
4: Where an agent makes a proposition but the taxpayer does not agree to any of the adjustments.
When working with a corporate client, not all issues will be settled in an amicable manner. This happens especially when the audit cycle drags on over an extended amount of tax years.
The Appeals Phase
It is important to know your rights as the taxpayer during the appeals phase. Once the proposed adjustments have been completed during the auditing phase by an IRS agent, the taxpayer (if he/she pleases) has the rights to file a protest letter in order to defend their position on each issue raised. By filing this protest letter, you are in essence formally starting a dispute in the appeals phase. In the appeals phase, the goal of the IRS is to resolve tax disputes without having to go through a lengthy, hazardous, and time consuming litigation process. Before preparing the protest letter mentioned above, make sure to seek counsel with your tax lawyer or attorney beforehand. In many scenarios, taxpayers prefer to settle their disputes during the appeals phase. What this means is that both parties have made an agreement regarding the issue, and if there is a deficiency in the tax, the taxpayer is liable for any outstanding tax amounts plus interest.
The Trial Phase
The trial phase occurs if the taxpayer makes the decision to litigate the tax dispute brought forth by the IRS agent. There are two different types of tax litigation which can occur during this phase: Deficiency Litigation and Refund Litigation. The deficiency litigation procedure is when the issues are litigated without involving payment of the disputed tax. Refund litigation happens when the disputed amount of tax is eventually paid off by the taxpayer, and then attempted to become recovered via a refund.
These are only three phases which appear during a regular scenario involving tax litigation. There are many more, but hopefully by reading these you have gotten a clearer picture of the duties and responsibilities of tax attorneys and lawyers in Bakersfield and elsewhere.