General Tax Audit FAQ
These are common questions RJS LAW receives regarding general tax audit matters.
Do I have to give the IRS or other taxing authorities all of my personal information?
Not always. While taxing authorities such as the IRS have broad authority to request information and records, taxpayers are not required to comply with every request without limitation. An experienced tax attorney can help determine what information must be provided, protect taxpayer rights, and address privacy or scope concerns.
How much does it cost to hire a tax attorney?
Legal fees vary depending on the firm, fee structure, and complexity of the matter. RJS LAW offers free consultations, which include an initial evaluation of your situation and an estimate of legal fees.
Do I need to hire a tax attorney for every tax issue?
No. Some tax matters are relatively simple and can be handled without professional representation. Other matters are complex and benefit significantly from experienced legal counsel. We are happy to review your situation and provide a candid assessment of whether hiring a tax attorney is worthwhile.
What types of tax matters does your firm handle?
RJS LAW handles a wide range of tax matters, including:
- IRS cases
- California Franchise Tax Board (FTB) cases
- Employment Development Department (EDD) cases
- California Department of Tax and Fee Administration (CDTFA) cases
The firm also handles tax planning, nonprofit, estate planning, wills, trusts, and bankruptcy matters.
I received a notice saying I owe a large amount of taxes. Do I have to pay it all?
Not necessarily. You may be able to:
- Challenge the assessment through appeals or other procedures
- Reduce penalties by demonstrating reasonable cause
- Establish payment arrangements based on income, assets, and expenses
Each case depends on the facts and available remedies.
Will I go to jail for my tax problems?
In most cases, no. While taxing authorities do pursue criminal prosecutions in limited situations, only a small percentage of taxpayers face criminal charges. Taking proactive steps to correct errors, resolve tax issues, and avoid actions that escalate risk is critical. Consulting a tax attorney is strongly recommended if criminal exposure is a concern.
Will my tax problem follow me forever?
Generally, no. Most tax problems can be resolved, although resolution often takes time and effort. Payment plans and other resolution options are commonly available, and IRS tax debts typically expire after 10 years. Many taxpayers successfully move on after resolving their tax issues.
What about ads claiming taxes can be settled for “pennies on the dollar” or offering a “fresh start”?
Be cautious. While the IRS does offer an Offer in Compromise program that allows some taxpayers to settle for less than the full amount owed, most taxpayers do not qualify. Be wary of any tax professional who guarantees a settlement, promises a “fresh start,” or claims taxes can be negotiated like a commercial transaction.
If I owe back taxes and money is tight, should I pay current taxes or past-due taxes first?
In most cases, it is best to stay current on your present tax obligations before addressing past-due taxes. Taxing authorities want to see that taxpayers have corrected past mistakes and are compliant going forward.
Can I be personally responsible for taxes owed by my business?
Yes. Even if your business is an LLC or corporation, you may be personally liable for certain business taxes. Taxing authorities have tools that allow them to pursue individuals who had control or authority over business finances.
The IRS filed a tax lien. Does that mean I will lose my home?
Not necessarily. Taxing authorities foreclose on only a small percentage of tax liens. A tax lien is similar to an additional mortgage and typically affects selling, refinancing, or borrowing against the property. Options such as lien subordination or lien discharge may be available.
I filed a joint return and the tax problem was my spouse’s fault. Am I still responsible?
Possibly not. You may qualify for innocent spouse relief if you can show that you did not know, and had no reason to know, of the tax issue. Other factors—such as abuse or financial hardship—may also be relevant. Not all taxpayers qualify, and eligibility depends on specific facts.
My accountant made a mistake. Do I still have to pay the tax?
Yes. Taxpayers are ultimately responsible for the tax owed. However, you may be eligible for penalty relief if you reasonably relied on your accountant’s advice. This generally requires showing that you provided complete information, relied in good faith, and that the accountant was competent.
If an IRS agent is being unfair, do they have the final say?
No. The IRS has robust administrative appeal rights. Most IRS decisions can be appealed internally. An experienced tax attorney can help navigate the appeals process to seek a more favorable outcome.
Does filing a Collection Due Process (CDP) request stop IRS collections? General Tax Audit
A Collection Due Process request generally stops most collection actions, including bank levies and wage garnishments. However, there are exceptions. The IRS may still file tax liens, and in certain employment tax cases, levies may continue despite a pending CDP request.