Common Tax Debt Issues Solved by Experienced Tax Attorneys

Common Tax Debt Issues Solved by Experienced Tax Attorneys


IRS Audit: Our team of IRS tax audit defense lawyers is skilled in leveraging their extensive experience to assist you in mitigating potential tax liabilities and avoiding penalties.


Each year, approximately one million federal income tax returns undergo audits conducted by the Internal Revenue Service (IRS). These audits are not merely random; in fact, the IRS also carries out targeted audits that are prompted by potentially questionable filings. Should you find yourself subject to an IRS audit, it is imperative to mount a strong defense, regardless of the reasons behind the audit. A negative determination could result in significant liability and expose you to the possibility of civil or criminal prosecution.

Oberheiden P.C. is a preeminent law firm specializing in IRS audit defense, representing both individuals and businesses in all matters pertaining to the IRS. Our team of seasoned attorneys, including Mr. Chris J. Quick, a former Special Agent with IRS Criminal Investigations (IRS CI), possesses extensive experience in handling IRS audits and intricate federal tax fraud investigations. With an unwavering commitment to our clients’ best interests, we bring to bear a meticulous attention to detail and strategic approach to every audit we undertake, ensuring our clients’ protection to the utmost extent possible.


What are the Key Considerations for Dealing with an IRS Audit?

When facing an IRS audit, it is crucial to develop and implement a strategic defense plan, which begins with comprehending the issues that must be addressed. Is the agent merely seeking the necessary supporting documentation that you can readily and securely provide? Alternatively, is it plausible that you have either underreported or underpaid your obligations to the U.S. Treasury?

Gaining insight into the risks associated with an IRS audit entails understanding the inherent nature of the audit itself. In general, “correspondence audits,” which are conducted through mail without an in-person visit, pose the least amount of risk. However, they typically necessitate the provision of additional information to substantiate your tax returns. On the other hand, “office audits” necessitate a visit to the IRS office, while “field audits” involve IRS agents physically inspecting your residence or place of business. These types of audits tend to carry significantly higher stakes. Nevertheless, it is important to note that all audits carry the potential for the IRS to uncover violations of the tax code, thereby exposing you to substantial liability.


In the context of potential violations of the tax code, there are several common issues that have the potential to result in unfavorable outcomes. These include:

1. Failure to File All Necessary IRS Forms

For some taxpayers, filing Form 1040 each year is sufficient. However, many taxpayers have additional filing obligations to fulfill. In these cases, defense strategies can vary widely, from demonstrating that a specific filing was unnecessary to seeking innocent spouse relief.

2. Miscalculation of Federal Tax Liability

If you, your accountant, or tax professional made a mistake in calculating your federal tax liability during tax planning and document preparation, the IRS will require you to pay the full amount you owe, along with interest and tax penalties. Even if you relied on a third party to prepare your tax return, it is your personal responsibility to ensure the submission of accurate information to the IRS.

3. Cryptocurrency-Related Tax Code Violations

The IRS’s focus on enforcing the tax code has increasingly turned towards cryptocurrency-related violations. Taxpayers who struggle to accurately track their transactions may encounter significant challenges when addressing an IRS tax audit.

4. Violations related to business and employment tax can have significant consequences for businesses. These violations occur when businesses fail to fulfill their federal tax reporting and payment obligations, including the collection, reporting, and remittance of business or employment taxes.

5. The failure to report foreign income is a serious matter for United States taxpayers. According to federal tax law, taxpayers are required to disclose all income from any source to the Internal Revenue Service (IRS). Failing to report foreign income can result in substantial liabilities during an IRS tax audit.

6. Aside from the requirement to report foreign income, U.S. taxpayers are also obligated to disclose their offshore accounts and other offshore assets. This is done by submitting the Report of Foreign Bank and Financial Accounts (FBAR) form. Violations related to the reporting of offshore assets can have consequences not only with the IRS but also with the Financial Crimes Enforcement Network (FinCEN).


IRS Criminal Investigation’s ‘Strategic Priorities’

IRS agents conducting tax audits also review taxpayers’ records to identify any indications of potential criminal activity that would necessitate a criminal investigation and legal proceedings. This includes examining issues that align with the IRS CI’s four key “strategic priorities.”


  • Legal Source Tax Crimes revolve around the failure to pay the proper amount of tax on income obtained from legitimate sources.
  • Illegal Source Financial Crimes encompass activities that generate forbidden income, such as racketeering and related offenses.
  • Narcotics-Related Tax and Financial Crimes specifically refer to offenses connected to the unlawful sale and distribution of narcotics, in addition to other illegal source crimes.
  • Counterterrorism Financial Crimes involve individuals and organizations suspected of participating in illicit financial practices associated with counterterrorism efforts, exposing them to severe repercussions.


Potential Outcomes and Penalties of IRS Audits:

Potential outcomes and penalties are associated with IRS audits. When the Internal Revenue Service (IRS) conducts an audit, there are several implications that individuals or businesses may face. It is important to be aware of the potential consequences that might arise from such audits.

First and foremost, it is crucial to understand that there are different types of audits conducted by the IRS. These audits can range from correspondence audits, where the IRS requests additional information through mail, to field audits, where an IRS agent visits the taxpayer’s location for an in-person examination.

The outcomes of an IRS audit can vary depending on several factors, such as the nature and extent of the taxpayer’s noncompliance with tax regulations. In cases where the audit determines that the taxpayer has accurately reported their income and expenses, the audit may result in no changes to the tax return. However, if discrepancies or errors are identified, adjustments may be made to the taxpayer’s tax liability.

One potential outcome of an IRS audit is the assessment of additional tax, interest, and penalties. If the IRS finds that the taxpayer owes more taxes than originally reported, they may impose penalties and interest on the underpaid amount. These penalties can include accuracy-related penalties, negligence penalties, or fraud penalties, depending on the severity of the noncompliance.

In addition to financial repercussions, an IRS audit can also lead to the taxpayer undergoing increased scrutiny in future tax returns. If the audit reveals a pattern of inaccuracies or intentional noncompliance, the taxpayer’s subsequent returns may attract closer attention from the IRS, potentially resulting in more audits or investigations.

It is worth noting that the penalties imposed by the IRS can be significant. In cases of intentional fraud or tax evasion, the penalties can include criminal charges and potential imprisonment. It is therefore crucial to approach audits with caution and ensure compliance with tax laws and regulations.

To mitigate the potential negative outcomes of an IRS audit, it is advisable to maintain accurate and detailed records of income, expenses, and any supporting documentation. Proper record-keeping can help in substantiating claims and ensuring compliance with tax regulations.

In conclusion, IRS audits can have various potential outcomes and penalties. It is essential for individuals and businesses to be aware of the consequences that may arise from such audits and take the necessary steps to ensure compliance with tax laws. By maintaining accurate records and seeking professional assistance if needed, taxpayers can mitigate the risks associated with IRS audits and ensure a smoother process.


Frequently Asked Questions (FAQs): Safeguarding Yourself Throughout an IRS Audit

Q: What should I do if I have received a tax audit letter from the IRS?

If you have received a tax audit letter from the IRS, it is advisable to seek prompt consultation with a federal tax attorney. It is important to understand that the audit will not disappear on its own. Failing to effectively defend against the audit could lead to the IRS pursuing the full amount of back taxes claimed by its agents, in addition to imposing interest and penalties. However, by implementing a strategic defense strategy with the assistance of a tax attorney, you may have the opportunity to significantly reduce, or even eliminate, your liability.

Q: If I am being audited, can I deal with the IRS on my own?

If the IRS conducts an audit of your individual tax returns, it is possible for you to handle the audit independently. However, this is highly discouraged due to several compelling reasons. Firstly, the Internal Revenue Code is excessively intricate, requiring expertise in tax law that you likely do not possess. Furthermore, an audit may encompass multiple years’ worth of your federal returns. Engaging the services of a skilled IRS audit attorney enables a comprehensive evaluation of your risk exposure and facilitates interaction with the auditing agent on your behalf.

Q: What should I do if I know I have underreported or underpaid my federal tax liability?

If you are aware that you have inaccurately reported or underpaid your federal tax liability, it is crucial to exercise caution when dealing with your IRS audit. The IRS holds taxpayers responsible for taking proactive measures to rectify any errors in filing, and neglecting to do so can result in consequences that go beyond the original mistake in filing. While the IRS provides different voluntary disclosure alternatives, these options are solely accessible prior to their examination of your returns. To evaluate the available alternatives, it is advisable to promptly seek advice from a knowledgeable tax attorney.

By Denizan

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