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The Tax Law Offices of David W. Klasing

Santa Barbara Dual Licensed Tax Audit Attorney and CPA

Receiving a notification of an IRS or California state tax audit can send shivers down the spine of even the most seasoned resident of Santa Barbara. If not navigated correctly, such an audit can, at best, lead to potentially severe assessments of additional tax penalties & interest, to at worst, life altering criminal tax charges. The looming threat of these consequences can strip you of your peace of mind, casting a shadow over your daily life and aspirations.

Tax disputes can often be challenging, even in the most straightforward scenarios. It can be downright perplexing to deal with an unusual tax circumstance in Santa Barbara. In the face of an IRS tax audit, your initial reaction may be to acquiesce to the IRS’s demands, hoping to swiftly put the ordeal behind you. However, this approach seldom works in the taxpayer’s favor. It’s imperative to consult with a dual-licensed Tax Audit Attorney and CPA, as early in your audit as possible, who can provide invaluable insights into your rights, ensuring that the IRS or California state tax agency doesn’t exploit your fears and unfamiliarity with the intricacies of federal tax laws.

Another reason why it is so vital to work with a tax lawyer from the outset is the fact that the IRS and California State tax agencies are all known to share information. These organizations are (1) the Franchise Tax Board (FTB), which audits California personal and corporate income tax returns; (2) the California Department of Tax and Fee Administration (CDTFA) (formerly known as the BOE), which performs California sales tax audits; and (3) the Employment Development Department (EDD), which performs California employment tax audits. Accordingly, the FTB, EDD, and CDTFA may audit your California tax return(s), depending on what sort of return(s) you or your business filed. If an IRS or California state agency audit discovers problems or other improprieties, they will likely share this information with the sister agency. Thus, it is common for taxpayers to face a federal and subsequent California state tax audit and vice-versa.

Our dual-licensed Santa Barbara Tax Audit Defense Attorneys and CPAs excel in addressing complex tax dilemmas. Whether it’s assisting online vendors with California’s evolving sales tax regulations or steadfastly supporting businesses during high-risk IRS audits, our strategic interventions aim to curtail your tax liabilities and safeguard you from potential civil or criminal tax repercussions. From meticulously managing amended tax returns to handling intricate IRS home, office, correspondence, eggshell, or reverse eggshell tax audits, we always place your interests at the forefront, ensuring minimized risks and solutions tailored to your needs.

In addition to having years of experience as a dually licensed Tax Lawyer and CPA in Santa Barbara, our founder and principal attorney, David W. Klasing, possesses decades of experience as former auditor in public accounting, and has represented client’s in federal (IRS) and California (FTB, CDTFA, EDD) audits for nearly 30 years, enabling our tax team to navigate the audit process with precision and skill. Types of federal and California tax audits in which we provide representation include:

One of the Best Tax Audit Defense Lawyers and CPAs in Santa Barbara

The Santa Barbara Tax Audit Defense Attorneys at The Tax Law Offices of David W. Klasing are ready willing and able to help you face the IRS or State of California in your audit. Whether your taxes are perfectly correct or contain egregious errors that could be viewed as purposeful income tax evasion, our Audit Defense Lawyers, CPAs and EAs are here to help. In a best-case scenario, our Firm may be able to help convince the IRS or California Taxing Authority that your taxes were correct as originally filed, and are prepared to fight their findings in court if they get either the facts or the law wrong, as they frequently do.

Without the seasoned eyes of our dual-licensed Santa Barbara Tax Litigation Attorneys and CPAs at the Tax Law Offices of David W. Klasing, your high risk tax issues could snowball and result in serious civil and criminal tax consequences. We are dedicated to providing unparalleled representation in IRS and California state tax disputes. Our seasoned Attorneys and CPAs specialize in various services, including navigating sensitive (eggshell) audits, ensuring tax compliance, and advising on reporting positions. Our clients benefit from our strategic handling of disputes related to employment tax, estate and gift tax, cases involving unreported income, and actual and potential allegations of civil & criminal tax fraud. We meticulously assess litigation risks where latent criminal tax issues may exist to secure resolutions as soon as possible, drawing upon our deep understanding of the procedural rules and substantive issues at play. To date, we have never lost in tax court. We won’t take your case if we don’t believe we’ll win. The IRS’s 98% settlement rate is why we’ve never stepped foot in tax court, sparing our clients the most expensive part of tax litigation.

Our skilled tax litigation & appeals lawyers & supporting CPAs have extensive knowledge and experience dealing with various federal and California state tax audit issues. This incorporates representing clients in disputes involving IRS audits, disputes with the CDTFA, BOE, and FTB, claims for refund, tax collection defense, innocent spouse relief, criminal tax defense, and more. Whether it’s handling cases of criminal tax exposure, guiding you through a civil tax audit, eggshell audit, reverse eggshell audit, or defending against a criminal tax investigation, the expertise of our seasoned dual-licensed Santa Barbara Tax Litigation Attorney and CPA is invaluable. As an experienced litigator, David W. Klasing can represent you in the Federal or California Tax Court. Call 805-200-4053 or schedule a reduced-rate initial consultation here at our Santa Barbara office or one of our other convenient locations across Southern California. Our services include representing clients in the following scenarios:

Calculating Money

Why Might The IRS Audit You?

Statistical Analysis: Every federal tax return undergoes a computerized statistical analysis by the IRS. Returns are scored based on their likelihood of understating taxable income. The higher the score, the more likely the return is to be audited;

Mismatched Information: Tax returns are cross-referenced with third-party information, such as W2, 1099 forms, etc. Discrepancies between your tax return and this data can trigger an IRS tax audit;

Lifestyle and Income Discrepancies: A noticeable disparity between your reported income and financial spending habits, like large charitable donations, can raise IRS suspicions. Paying off huge debts with deficient historical reporting of income is also a red flag which ordinarily leads to a high-risk IRS eggshell or reverses egg audit;

Business Reporting Anomalies: Continuous reports of business losses or sudden downturns in business performance can draw the IRS’s attention. Multiple years of reported business losses might also trigger an IRS tax audit;

Clerical Errors: Simple errors, like transposing numbers or adding/omitting zeros, can lead to discrepancies in your tax return and result in an IRS tax audit.

Facing a Tax Audit in Santa Barbara

If you are facing a Federal or California state tax audit, it does not have to be the end of the world. An audit does not automatically mean that you are currently in trouble with the IRS, FTB, CDTFA (BOE), or EDD or that you could wind up facing criminal tax charges. Audits can occur on a random basis under the IRS’s national research program, or may be triggered by as statistical analysis of the deductions or credits that place your taxes outside the statistically proper norms. An audit could also be triggered if your business partners, company, or investors are facing audits or investigations for tax crimes or other serious tax issues – but that does not automatically mean that you, personally, did anything illegal. But after over 2 decades of audit and criminal tax investigation representation experience, it is very rare, in our opinion, that the IRS, FTB, CDTFA (BOE), or EDD is completely satisfied that your original taxes were filed correctly. Moreover, it is very rare where a Federal or California tax audit ends without the assessment of additional tax, penalties and interest, at a minimum, therefore it behooves you to protect yourself. If the IRS, FTB, CDTFA (BOE), or EDD finds serious inconsistencies, failures to file, improperly excluded taxable income, or other violations of the Tax Code, they may assess additional tax, penalties and interest at best, or, at worst, refer your case to their criminal division.

If you have failed to file tax returns, have underreported your income, or have taken other actions that could constitute tax evasion, our dual-licensed Santa Barbara Tax Fraud Attorneys and CPAs can defend you in court, negotiate with the IRS, protect your constitutional rights, mitigate your penalties, and bring you back into compliance with the Internal Revenue Code. Contact the Tax Law Office of David W. Klasing online immediately to arrange a reduced-rate initial consultation or call our Santa Barbara tax office at 805-200-4053 for help today.

The U.S. is unique in its citizenship-based taxation that imposes stringent tax reporting and disclosure laws, especially for those holding foreign assets. Non-compliance, failing to file or pay taxes, can result in hefty penalties, with a 5% charge on the outstanding tax bill for each month of delay beyond the original tax filing deadline up to a maximum of 25%. Moreover, undisclosed foreign accounts, once considered safe havens, now carry substantial risks due to regulations like FATCA and the Bank Secrecy Act’s FBAR. At the Tax Law Offices of David W. Klasing, our dual-licensed Santa Barbara Unfiled Tax Return Attorneys and CPAs stand ready to guide you through these complexities. Whether you’re confronting the repercussions of unfiled tax returns or navigating foreign account disclosures, our expertise ensures compliance and the protection/mitigation of potential civil or criminal tax consequences.

IRS Audit Representation

The IRS handles any audits related to federal income tax returns, whether they are business or personal returns. These audits can be triggered randomly or but ordinarily are triggered by suspicious activity that makes the IRS believe you are underreporting income, underpaying taxes, or claiming exemptions or credits that do not actually apply to you. These audits typically look back over 3 years of your records, but in some cases the IRS will be permitted to look back over 6 years or more of your records.

3 Types of Tax Audits: Correspondence, Field, and Office

A tax audit, also termed a taxpayer “examination,” is a formal review process. It is conducted by a federal tax authority, often the Internal Revenue Service (IRS), or by a California state agency. However, despite sharing the same general purpose of evaluating taxpayer records, tax audits are not “one-size-fits-all.” On the contrary, there are actually numerous types of tax audits, ranging from worker classification audits (which examine whether employers have properly classified their workers as “employees” versus “independent contractors”) to FBAR audits (which can arise following a failure to report taxable foreign income or to provide required foreign information reporting). Regardless of what sort of tax issue gives rise to an audit, the examination itself will generally fall into one of three categories: it may be categorized as a “correspondence” audit, a “field” audit, or an “office” audit. We will provide a brief summary here but click here to learn more about the types of audits and how to handle them in detail.

Correspondence Audits

Correspondence audits are performed, at least initially, through written correspondence. These audits typically question specific items from your business or individual tax returns instead of questioning your return in its entirety. For example, if you claim to have donated a large amount of money to charity, the IRS may ask for proof of these donations. In that case, your audit may be resolved by simply mailing the IRS agent copies of receipts that will verify the information in question. Still, you should be notified of any type of audit through the mail, not just correspondence audits.

Field Audits

Field audits are among the IRS’s most in-depth, stressful, frightening, invasive and high-risk types of in person examinations. If your business or individual return is subject to a field audit, an IRS agent will ordinarily request an in-person meeting to discuss discrepancies found on your tax return to take place either in your home or business location. Support from our experienced dual-licensed Tax Audit Attorneys and CPAs is highly valuable and downright comforting when undergoing a field audit.

Office Audits

You will also have to sit down with an IRS agent in person if you are subject to an IRS office audit. However, these interviews will be performed at local IRS offices which can be downright intimidating. During your office audit, you will be asked to answer questions pertaining to any item reported on your businesses or individual income tax returns. In order for the issue to be resolved, you will have to prove that the information you filed was correct or that you made a mistake in good faith.

Every type of audit should be taken seriously, no matter how minor or insignificant the underlying issue initially appears to be as your net worth and potentially your liberty is at stake. As the IRS points out (bold our emphasis), “A correspondence audit can expand and become an in-person (field) audit, particularly if the issues grow more complex or the organization does not respond.” You need the services of a tax lawyer during correspondence audits to avoid incurring civil or criminal tax penalties. Our dual licensed Santa Barbara Tax Lawyers and CPAs can help you reconstruct the necessary records and mitigate any civil damages or criminal exposure for errors you made on the returns under audit. We will appear alongside you for an office audit if you have serious concerns about what was claimed on the return under audit. While the prospect of undergoing a field audit can be daunting, it would be wise that you face it while represented by our experienced dual licensed Santa Barbara Attorney-CPAs.

For information about other aspects of the audit process, readers may be interested in our related audit articles, which explore topics such as:

Dual-Licensed California Franchise Tax Board (FTB) Attorneys and CPAs

The California Franchise Tax Board (FTB) is California’s primary tax authority, responsible for functions such as collecting and reviewing state tax returns, issuing tax refunds, assessing tax liabilities, and, where financial errors or suspicious activities are detected, conducting audits of businesses and individual taxpayers. If you disagree with the results of an FTB audit, you may challenge or “protest” the outcome. If FTB has contacted you and you are aware that you made false statements or used inaccurate reporting techniques when filing your taxes, do not face the audit alone. Our experienced dual-licensed Santa Barbara FTB Audit Appeals Attorneys and CPAs will act as a barrier and stop the examining agent from inferring criminal admissions / confessions from your actions and words.

It is never prudent to ignore an FTB notice, even if you disagree with its findings, or are unsure precisely what the notice is in reference to. Contrary to being forgotten, interest on any unpaid tax debts will simply continue accruing until your debt is satisfied. Click on the following to learn more:

California Employment Development Department (EDD) Audit Representation

While the IRS handles the administration of the federal employment tax obligations, the Employment Development Division handles the state-based employment tax obligation in California. When dealing with the EDD or the IRS for in-person meetings, you can expect to be asked to provide a tour of the business facilities to the tax authorities.

Oftentimes, the IRS or EDD agent will conduct an informal interview with the individual giving the tour, including the individual’s role in the company, the business the company is engaged in, and the markets and places where the company’s goods and services are sold. The audit process truly begins at this stage, as the auditor is detailed oriented and will take note of the scope and scale of your operations.

EDD deals with issues related to the state payroll tax. Every employer is required to take payroll taxes out of their employees’ checks and hold the money in trust to eventually turn over to the appropriate state or federal agency. Payroll tax issues can come up in federal audits in addition to audits by the EDD. If you are not taking the appropriate amount out of your employees’ paychecks or failing to turn the money held in trust over as required, you could face civil or criminal penalties. Our experienced Santa Barbara EDD Tax Audit Attorneys & CPAs can help gather evidence to show the EDD you have properly classified workers as independent contractors.

Note: with the passing of AB5 in 2019, worker classification audits are on the rise. Issues that can increase the odds for facing an employment tax audit or exacerbate the consequences of such an audit include:

California Department of Tax and Fee Administration (CDTFA) Audit Representation

The California Department of Tax and Fee Administration (CDTFA) conducts audits related to state sales taxes. Any business dealing with intangible goods is required to charge a sales tax on those goods and remit it to the proper state tax authorities. The amount can vary depending on where your business is based and what you sell. This can require extensive record-keeping to ensure you are paying what you owe. If you fail to remit sales tax revenue as required, you could be subject to an audit by the CDTFA. At the Tax Law Offices of David W. Klasing, our dual-licensed tax attorneys & CPAs have decades of experience and tons of success in helping our clients handle these audits and working to bring them to the best possible resolution.

Sales tax audits by the CDTFA can be intrusive and require large amounts of records. If the CDTFA believes you owe back taxes, it may be in your best interest to work out some sort of settlement at the audit stage. At the Tax Law Offices of David W. Klasing, our seasoned tax attorneys have years of experience negotiating with the CDTFA and helping to bring our clients’ cases to a successful conclusion. To schedule a consultation, call our office today at (800) 681-1295.

Recently, the CDTFA issued updated guidance on protocols and procedures for disputing, or “appealing,” CDTFA determinations. Though the CDTFA makes efforts to provide clear instructions for taxpayers, it is not recommended to attempt handling an appeal without professional tax representation. It is in your best interests to consult our experienced dual-licensed CDTFA Audit Attorneys & CPAs before filing an appeal or petition for redetermination due to the legal and financial complexity involved. We can help you appeal IRS and California state tax audit decisions involving:

● Income Taxes

● Excise Taxes

● Payroll Taxes

● Property Taxes

● Corporate Taxes

● Small Case Request

● Estate and Gift Taxes

● Fail ure to Respond to Notice of Deficiency within 90 Days

● Collection Appeals Program (CAP)

● Collection Due Process (CDP)

● Filing an Appeal vs. proceeding straight to Tax Court

● Sole Proprietorships

● Appeal an FTB Audit

● The California Office of Tax Appeals (OTA)

● California sales and use taxes

● Appealing an IRS Collection

● Installment Agreements

● Levies

● Liens

● Offers in Compromise

● Agreement with IRS Office of Appeals

● Updated Rules for Tax Appeals

● EDD Appeals

● CDFTA Appeals

Defending Against an IRS, FTB, CDTFA (BOE), or EDD Audit or Criminal Tax Investigation

Even if a Federal or California audit or investigation turns up incriminating evidence against you, there is still a chance to defend yourself – or better yet, hire a Tax Audit or Criminal Defense Tax Attorney to defend you. The taxing authority’s determination that your taxes were improperly filed and related assessment of additional tax, penalties and interest is not automatically correct. Neither is any assertion that you committed a tax crime. The taxing authorities often misinterpreted the law or facts and overlook / discount evidence that would mitigate or reduce their assessment, or even prove that your original tax filings were correct or that you have not committed a tax crime. Our team of Tax Attorneys, CPAs and EAs are ready willing and able to appeal or litigate your case, either to mediation or to Tax Court or to California’s Office of Tax Appeals. We also have extensive experience and success in defending Federal and California criminal tax investigations.

At the end of an audit or investigation, the IRS, FTB, CDTFA (BOE), or EDD will either determine that your taxes were correct and there is no adjustment necessary, or that something was wrong, and you need to pay additional taxes, penalties and interest and a determination that a tax crime was committed is possible. If the taxing authority does discover errors and or suspects acts of evasion, our Tax Attorneys, CPAs and EAs may be able to work with the taxing authority to come to an agreement that avoids criminal charges, corrects the errors, and sets you down a better path for future taxation. If the taxing authority is unable to agree to a beneficial plan, our Firm will shepherd your case through the appeals, litigation, or prosecution process, and attempt to overturn the taxing authorities’ assessment and vindicate you of the intentional or non-intentional “errors” they assert exist in your taxes.

As noted above, it may be possible to appeal the results of an IRS tax audit if you disagree with the initial conclusions of the audit. The IRS will consider appeals based on factual or legal disputes, though any disputes “based on moral, religious, political, constitutional, conscientious, or similar grounds” will be summarily rejected.

To appeal an IRS tax audit, you must write a “protest letter” or draft a tax court petition outlining the nature of, and basis for, your dispute, including relevant facts and laws to strengthen and support your position. This letter should be sent to the address featured on the letter explaining your appeal rights – not to the actual Office of Appeals, which may result in significant delays. It is in your best interests to be represented by a knowledgeable and effective IRS Tax Appeal Lawyer serving Santa Barbara, which will increase your likelihood of achieving a favorable outcome.

Our dual-licensed Santa Barbara Appeals Attorneys and CPAs provide skilled representation before an appeals officer. An essential element of having a successful outcome in the appeals process is to have detailed and organized records. Utilizing our extensive training and experience, we make sure your documents are in order and that you are in the best position to prevail at the appeals stage. Dealing with the IRS’s Office of Appeals can seem daunting, but we bring strategic insight and a very long track record of success to the process. Whether you’re dealing with an IRS or California state tax audit, challenging a tax assessment, or seeking relief from IRS collection actions, our meticulous approach ensures you’re well-prepared for every step of the appeals process. From handling trust fund recovery penalties to disallowed business expenses, we will ardently fight for you, keeping you informed throughout the process.

Recently, the CDTFA issued updated guidance on protocols and procedures for disputing, or “appealing,” CDTFA determinations. Though the CDTFA makes efforts to provide clear instructions for taxpayers, it is not recommended to attempt handling an appeal without professional tax representation. It is in your best interests to consult our experienced CDTFA Audit Attorneys before filing an appeal or petition for redetermination due to the legal and financial complexity involved. We can help you appeal IRS and California state tax audit decisions involving:

When an IRS Audit Becomes a Criminal Investigation

Most taxpayers remain oblivious to potential issues until an unexpected visit from IRS criminal tax investigators blindsides them. These investigations can arise from many reasons, ranging from unintentional oversights to deliberate tax evasion tactics.

In Santa Barbara, discerning the difference between a routine tax audit and the exponentially more detrimental criminal tax investigation led by the IRS’s Criminal Investigation Division (CID) is paramount. While the primary objective of a tax audit is to ascertain the accuracy of reported taxes, a CID probe is geared towards gathering evidence to potentially charge someone with criminal tax violations, primarily for the deterrent effect it casts on the general populace. This approach stems from the belief that maintaining faith in the tax system necessitates regular criminal tax enforcement against intentional rule-breakers.

CID’s investigative focus encompasses:

Legal Source Income Tax Violations: Addressing individuals who, despite earning legally, illegally evade the taxes they rightfully owe;
Financial Crimes from Unlawful Activities: Encompassing tax offenses, money laundering, and other financial crimes tied to illicit activities;
Drug-Related Financial Crimes: CID’s significant role in combating drug crimes involves tracing and documenting the financial trails leading to critical figures in drug syndicates and
Counterterrorism Financing: CID collaborates with other federal agencies, lending its financial investigative expertise to terrorism-related cases.

1040 Tax Form

What Should I Do if I am Being Audited or Criminally Investigated for a Tax Crime?

The first step after receiving notice that you are being audited or criminally investigated for tax crimes by a Federal or California tax authority, should be to contact an IRS Audit and Criminal Tax Defense Attorney. The Tax Lawyers, CPAs and EAs at The Tax Law Offices of David W. Klasing are ready willing and able to fight to protect your constitutional rights and help mitigate the assessment of additional tax, civil and criminal penalties and interest.

The next step should be to confirm that the audit or criminal tax investigation is legitimate. There are thousands of scams where individuals pretend to be IRS employees in an attempt to dupe taxpayers into paying them money. These sorts of scams are unacceptable, and our Firm can help you verify the legitimacy of any alleged audits or criminal tax investigations against you.

After contacting a Tax Attorney, you should begin gathering all of the economic records you can. Audits may not apply for the most recent tax season, but could reach back up to six years. The typical audit deals with the taxes from two to three years ago, and may come well after filing. Collecting your tax records, investment records, pay stubs, other economic records and accounting records, back this far may be a complex task, but may ultimately help protect you from the negative outcomes of an audit or criminal tax investigation.

When facing tax audits from agencies like the IRS, CDTFA, EDD, or FTB, certain red flags, such as destroyed records, underreported income, or unfiled returns, can intensify the examination, leading to high-risk eggshell and reverse eggshell tax audits . As such, residents and businesses must be aware of potential criminal tax violations and the signs indicating that they might be under a more rigorous investigation by the IRS’s Criminal Investigation Division (CID). This is especially so when the taxpayer has a history of blatantly cheating on their federal tax returns and is now under audit and thus fears criminal tax prosecution. Even international tax evasion schemes that utilize remote tax havens are easily detected by the IRS, which works with tax and law enforcement agencies around the globe and throughout the United States.

At the Tax Law Offices of David W. Klasing, we understand the gravity of potential tax charges stemming from intentional tax evasion, fraudulent withholding, or false statements and the associated heavy fines and prison sentences. Skilled legal representation can make all the difference between an IRS audit concluding uneventfully – or spiraling into a dangerous criminal tax investigation. If you or your small business has been selected for a tax audit in Santa Barbara, and you are concerned about a criminal tax investigation resulting from or occurring alongside the audit, engaging our Santa Barbara Dual Licensed Criminal Defense Attorneys & CPAs services at the onset of a high-risk audit / criminal tax investigation will maximize the possibility of a favorable outcome without escalating to criminal tax charges. We are here to provide aggressive, informed representation in areas including:

International Taxation Attorneys, CPA and EAs in California

The United States is one of the only countries in the world to impose taxes based on citizenship instead of residency. Under this system of “citizenship-based” taxation, many taxpayers are subject to tax laws of which they are unaware. Examples of taxpayers who may be impacted by international tax law issues include:

Recent immigrants or frequent business travelers who have income generating assets and bank accounts in other countries
Taxpayers who have dual citizenship with the United States
Taxpayers who have recently sent money to the U.S. via wire transfer
S. expats who live and/or work abroad

Taxpayers who belong in these categories are, for example, generally subject to the Bank Secrecy Act (BSA), which requires U.S. citizens and companies to report foreign income and foreign information to the IRS. This foreign information is typically reported by filing FinCEN Form 114 (otherwise known as the Foreign Bank Account Report, or “FBAR”), filing Form 8938 (Statement of Specified Foreign Financial Assets) under the Foreign Account Tax Compliance Act (FATCA), and meeting a multitude of other requirements for international taxpayers. Failure to report global income and omitting foreign information reporting can lead to civil or even criminal penalties, depending on whether such failure was “willful” or constituted tax fraud.

Our Santa Barbara FinCEN Form 114 Attorneys, CPAs and EAs specialize in guiding taxpayers through the intricacies of FinCEN Form 114, a mandatory IRS form for reporting offshore bank accounts. Our award-winning team, with a long track record or excellence in international tax representation, ensures compliance, safeguards your legal rights, and strategizes to minimize IRS tax penalties. Navigating the intricacies of the Corporate Transparency Act (CTA) and FinCEN’s new filing requirements can be daunting for businesses. Contact our Santa Barbara office at (800) 681-1295 or contact us here online for assistance on the following:

If you’re engaged in international business or managing foreign assets, navigating the complex landscape of global taxation is crucial to success. At the Tax Law Offices of David W. Klasing in Santa Barbara, our team of dual-licensed International Santa Barbara Tax Attorneys, CPAs & EAs is poised to protect your interests. Addressing compliance oversights is essential, with the IRS escalating its efforts to uncover unreported global investment income, offshore businesses, and financial accounts. Now is the time to enlist experienced legal counsel to review your international tax filing history, ensuring compliance that minimizes additional tax and penalties and avoids criminal tax prosecution. Whether you’re an American expatriate or have multiple offshore business entities and investments, we provide meticulous attention to ensure your international tax dealings are reported with precision and foresight. Our association with Marc Schwartz, a dually licensed International Tax Attorney and CPA, greatly enhances our ability to address the often complex federal offshore tax planning, compliance, and controversial implications surrounding engaging in international business and the associated mandatory information reporting.

Get Back into Tax Compliance without Facing Criminal Tax Prosecution In Santa Barbara

Our dual-licensed Santa Barbara Voluntary Disclosure Attorneys and CPAs offer experienced guidance through the IRS Voluntary Disclosure Practice (VDP). This program is crucial for individuals in Santa Barbara who have willfully understated their Federal tax liabilities. It provides a systematic and secure avenue to rectify their tax status while avoiding criminal tax prosecution. Similarly, the State of California’s Franchise Tax Board (FTB) and the California Department of Tax and Fee Administration (CDTFA) provide methods for non-compliant taxpayers in Santa Barbara to regain compliant status by coming forward with the details of their failure to comply with the California state tax code. The path to voluntary disclosure to the FTB depends on whether you are an in-state or out-of-state filer. We are dedicated to assisting in making sincere, comprehensive, and timely disclosures to the IRS and California state tax authorities, which includes arranging for the payment of owed taxes, interest, and penalties and cooperating with the tax agencies to determine the correct tax liability.

In response to recent changes, the new Department of Justice Tax Division’s Voluntary Disclosure Policy encourages entities, including partnerships, government entities, and unincorporated associations in Santa Barbara, to make voluntary disclosures to the Tax Division, even if they believe the government may already be aware of the misconduct.

Our dual-licensed Santa Barbara Voluntary Disclosure Attorneys and CPAs skillfully navigate the complexities of various federal and California state voluntary disclosures, including domestic, offshore, CDTFA, and FTB voluntary disclosures, streamlined procedures, and delinquent FBAR and international information return submission procedures. As long as a taxpayer in Santa Barbara who has willfully committed tax avoidance (potentially including non-filed foreign information returns coupled with affirmative evasion of U.S. income tax on offshore income) self-reports the federal tax non-compliance through a domestic or offshore voluntary disclosure before the IRS has started an audit or criminal tax investigation/prosecution, the taxpayer can ordinarily be successfully brought back into tax compliance and receive a nearly guaranteed pass on criminal tax prosecution and simultaneously often receive a break on the civil penalties that would otherwise apply. We deal with:

Santa Barbara Tax Evasion Defense Attorneys for Individuals and Corporations

If you, your husband or wife, or your business has been accused of engaging in tax evasion, especially if this took place in open divorce court, an informant or a whistleblower is involved, it is absolutely imperative that you consult with an experienced tax evasion attorney for legal help immediately. Unlike a Certified Public Accountant (CPA), who is primarily equipped to handle financial tax planning and compliance, an attorney or dually certified attorney-CPA is well-versed not only in California state and federal tax laws, but also in court procedures, legal precedents, and criminal tax defense including the use of protections against unreasonable searches and self-incrimination available under federal constitutional law. This enables a stronger, more rigorous defense, improving the odds of a case dismissal, significant civil and criminal penalty reductions, or other favorable outcomes. Additionally, a tax lawyer provides the advantage of the attorney-client privilege, which can be instrumental in defending and building a criminal tax defense or when negotiating with the IRS. Don’t let the tax professional that you turn to for help be forced to turn witness against you. Only discuss criminal tax issues with a criminal tax defense attorney. Also, be aware that you have a conflict of interest with the original preparer of the return at issue. Throwing you under the bus will protect their reputation while putting you at extreme risk of criminal tax prosecution.

The Santa Barbara Tax Evasion Defense Attorneys at the Tax Law Office of David W. Klasing have experience handling most types of potential misdemeanor and felony tax evasion charges, including federal income tax evasion, state income tax evasion, employment tax evasion, sales tax evasion, corporate tax evasion, cryptocurrency and Bitcoin tax evasion, offshore tax evasion, and divorce tax evasion. We can also provide assistance with related tax matters, such as unfiled or delinquent tax returns, undisclosed foreign accounts and related foreign taxable income, and tax preparer liability. For a reduced-rate initial consultation, call our tax offices immediately at (805) 200-4053 or (800) 681-1295, or contact the Tax Law Office of David W. Klasing online.

Struggling with Cryptocurrency Taxation in Santa Barbara?

In the rapidly evolving world of virtual currencies like Bitcoin and other digital assets, many investors and traders are navigating complex Federal and California state tax implications. Receiving a letter from the IRS about unreported cryptocurrency transactions discovered via John Doe Summons can be alarming. It may lead to a high-risk eggshell audit or even a covert criminal tax investigation if not addressed appropriately. The surprise is often considerable when individuals learn that exchanges of one type of crypto for another are taxable events in the year they occur, even with no fiat currency changing hands, or that the IRS might have obtained their transaction details from sources like Coinbase. The volatile nature of the crypto market, with its significant highs in 2017 followed by subsequent lows, has left many facing substantial tax liabilities, often disproportionate to their current portfolio value.

Our Santa Barbara Bitcoin and Virtual Currency Tax Attorney & CPA have extensive experience in all facets of cryptocurrency, from understanding the nuances of airdrops to addressing challenges faced by individuals whose crypto was held with a brokerage that has since folded. The exposure is even more significant for those who’ve ventured offshore with cryptocurrency. However, there’s a silver lining: taxpayers who’ve intentionally committed tax evasion can often self-report through voluntary disclosure, potentially avoiding criminal tax prosecution and benefiting from reduced civil tax penalties.

Whether you’re dealing with Bitcoin, Ethereum, Litecoin, or any other virtual currency, call us today at 949-681-3502 or schedule a reduced-rate initial consultation here , and we will successfully guide you through the record-keeping and reporting procedures required to file a tax return. We will also fight vigorously for those whom the IRS has accused of failure to report and help them stave off more severe civil and criminal tax penalties. Read our story “Tax Fraud is Going Virtual” to know more about virtual tax evasion. For more information, see the following:

In Need of Tax & Estate Planning in Santa Barbara

Our dual-licensed Estate Planning Tax Attorneys and CPAs represent estate planning clients throughout the globe with convenient offices in Santa Barbara, the surrounding California counties. Our custom estate planning representation ensures that your final wishes are honored and helps you provide for your loved ones in your absence. Combining our financial planning, legal, tax, and accounting skills, and knowledge, we are committed to helping you preserve your wealth for future generations. Estate planning is a necessary process that a knowledgeable lawyer can compassionately and effectively handle. Our services include creating tax-efficient estate plans that reflect your goals, assisting with preparing and filing estate tax returns, and offering expert advice on gift tax implications.

Estate planning involves multiple components, which need to be customized depending on the unique set of facts and circumstances underlying your financial situation, such as the size of your estate, the number of heirs involved, and the complexity and location of your domestic and international assets, including whether foreign or offshore bank accounts are involved. Our skilled California Estate Planning attorneys and supporting staff of CPAs and CPA candidates have decades of experience assisting clients with wills, trusts, advanced healthcare directives, and other estate planning and administration matters. We assist in:

Confused About California State Sales Tax Rules in Santa Barbara?

In Santa Barbara, businesses that collect sales tax from their customers are entrusted with remitting those taxes back to the California Department of Tax and Fee Administration (CDTFA), (formerly known as the State Board of Equalization (BOE)). Any discrepancies, such as failing to pay collected taxes or having revenue that’s not appropriately taxed, can trigger a California sales tax audit by the CDTFA. Given the significance of sales tax, which accounts for over 80% of the Department of Tax & Fee Administration (CDTFA) revenue collection, California state tax audits are common, especially for businesses in certain high-risk industries. If you find your business selected for a tax audit, it would be wise to remain composed and promptly contact our dual-licensed Santa Barbara Sales Tax Attorneys & CPAs.

With recent overhauls in sales tax laws, especially after the U.S. Supreme Court’s in Wayfair granting states more power to enforce compliance over online sellers, it would be wise to have our dual-licensed Santa Barbara, CA Internet Sales Tax Attorney + CPA by your side. From internet sales tax audit representation to small business tax planning and bookkeeping services, we possess the experience to answer your business tax questions and help you achieve your goals. Our expertise spans from understanding the sales tax nexus and differentiating between sales and use tax to assisting with the complexities introduced by internet sales. Trust our Santa Barbara Sales Tax Audit Attorneys to provide comprehensive sales tax advisory and representation, ensuring your business thrives in Santa Barbara’s complex regulatory environment.

The Santa Barbara Tax Law Attorneys, CPAs and EAs at The Tax Law Offices of David W. Klasing are ready, willing and able to help you defend against an IRS, FTB, CDTFA (BOE) (BOE), or EDD audit or criminal tax investigation. Our experienced staff will review your case, communicate with the auditing / investigating taxing authority on your behalf, and fight to get the best result possible. If the results achieved are less than optimal, our Tax Appeals and Criminal Tax Defense Lawyers will fight to better the situation in the appeals and litigation process or where necessary, strive to get a declination prior to criminal indictment, or worst-case scenario, try to achieve damage control through an advantageous plea bargain. To schedule a reduced-rate initial consultation regarding your audit or criminal tax investigation / prosecution, call 805-200-4053 or 800-681-1295 or schedule online today. Our Santa Barbara Tax Law Office is conveniently located in Downtown Santa Barbara, just off State Street.

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The Tax Law Offices of David W Klasing: Your Ally in Tax Audit Defense

David W. Klasing Esq. CPA M.S.-Tax possesses dual licenses, enabling him to practice both as an Attorney and a Certified Public Accountant in areas like Taxation, Estate Planning, and Business Law. With nearly three decades of professional immersion in tax, accounting, and business consulting, he commands a profound grasp of IRS and California state tax codes, regulations, and case law. This mastery is pivotal in ensuring clients are shielded from potential civil and criminal tax implications during IRS tax audits, especially high-risk Eggshell and Reverse Eggshell Audits.

Boasting an admirable A+ rating from the Better Business Bureau and an impeccable perfect 10.0 score from AVVO, David remains steadfast in his commitment to exceptional tax audit defense representation. In a nation teeming with over a million attorneys and more than half a million CPAs, only an estimated 24,000 professionals have the distinction of dual licensure. Even more exclusive, a mere 3,000 have additionally achieved the esteemed credential of having earned a Master’s in Taxation. David W. Klasing, a prominent figure within this elite group, leverages his unmatched academic and nearly three decades of hands-on experience to support our clients through their IRS tax audit challenges ardently.

We Aim to Achieve the Best Possible Results

During a tax audit, our objectives are clear-cut:

Safeguard against the tax audit escalating into a criminal tax probe;
Avoid civil tax fraud penalties, which can be substantial;
Diminish additional tax, penalties, and interest;
Confine the audit to as few tax years as possible.

It’s imperative for taxpayers to be represented by seasoned tax defense counsel during IRS or California state tax audits. At The Tax Law Offices of David W. Klasing, we ensure clients are adeptly advised on auditor interactions, safeguarding against unintentional self-incrimination. If tax fraud becomes a topic of discussion during a tax audit, clients may be promptly counseled to exercise their 5th Amendment rights against self-incrimination where deemed appropriate.

For the most part, we strive to handle the audit in a manner where the taxpayer is not interviewed by an auditor where possible, but this cannot be guaranteed because of the auditor’s subpoena power. Where an interview is unavoidable, we routinely advise our clients on the need for concise but accurate responses, the pitfalls of offering unsolicited information, and the importance of maintaining their composure when they are interviewed. If a line of questioning that could unearth potential tax fraud surfaces, our clients are advised to tread cautiously, speaking only when necessary.

Our commitment to providing above-and-beyond tax audit defense representation is evident in our A+ BBB rating and glowing testimonials. With competitive billing rates, a team of nationally recognized and highly qualified dual-licensed Attorney CPAs, and a dedication to achieving optimal results for each client, the Tax Law Offices of David W. Klasing stand as a beacon of excellence in addressing IRS and California state tax concerns.

In addition to our fully staffed 19,700 square foot penthouse office in Irvine, the Tax Law Offices of David W. Klasing has unstaffed (conference room only) satellite offices in Los Angeles, San Bernardino, Santa Barbara, Panorama City, Oxnard, San Diego, Bakersfield, San Jose, San Francisco, Oakland, Carlsbad, Sacramento, Las Vegas, Nevada; Salt Lake City, Utah; Phoenix, Arizona, Albuquerque, New Mexico. We also have virtual offices in New York, New York; Austin, Texas; and Washington, D.C.

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California Franchise Tax Board (FTB) Audit Representation

Audits related to your California income tax returns are conducted by the California Franchise Tax Board (FTB). Even if a federal audit found that you did not owe any money to the IRS, you may still owe money to the FTB because of the differences in state and federal tax laws. FTB audits are ordinarily completely independent of any federal audit. The FTB conducts independent audits when they suspect underpayment which is occasionally related to California-specific issues, such as someone who lives in California but is not paying required residency taxes. An FTB audit can be just as serious as one conducted by the IRS and you should retain the services of a skilled Tax Attorney. An attorney can help you reconstruct records, challenge any incorrect findings by the FTB, and mitigate any damage by working out a payment plan with the FTB for any back taxes that you do owe.

California Employment Development Department (EDD) Audit Representation

IRS audits cover federal payroll taxes, but California payroll tax audits are conducted by an entity known as the California Employment Development Department (EDD). Every employer in California is required to withhold California payroll taxes out of each paycheck for their employees and to remit these taxes to the proper state agency. Failing to collect or remit such taxes can result not only in owing back taxes but also in serious potential civil or even criminal fines and penalties.

One of the most common issues triggering an EDD audit is the suspected misclassification of those who work for you as independent contractors as opposed to employees. While employers are required to collect payroll taxes for employees, they are not required to do so for independent contractors who work for them. However, there are tight restrictions on who can and cannot be classified as an independent contractor. A skilled tax attorney can work the EDD to attempt to prove you have been classifying correctly, that any mistakes you made were unintentional, and to mitigate the damage from any and all payroll tax issues that arise in the course of the audit.

California Department of Tax and Fee Administration (CDTFA) Audit Representation

The California Department of Tax and Fee Administration (CDTFA) conducts audits related to issues with the state sales tax. What sales tax businesses are required to charge can be complex and vary depending on the locality from which they operate and the type of product they sell. For online businesses, the location of the consumer-buyer can also be a factor. If you are suspected of undercharging sales taxes or failing to remit them properly, you could be subject to a very invasive audit.

A tax attorney can help you prepare the numerous books and records you will need for such an audit, potentially including receipts and other records of every sale you made. If there was undercharging or underreporting, a lawyer can work to mitigate the potential civil or criminal fines and penalties. If you do not agree with the results of the audit, a lawyer will know how to timely file a petition challenging them so that you are not deemed to owe more than you do.

How Do You Choose a Tax Lawyer or CPA in Santa Barbara?

While many individuals or small businesses may seek a Tax Lawyer or CPA because of one specific concern, you should be aware of how easily a single tax issue can snowball into a larger deal that requires multiple angles of expertise. Even if you do not realize it, you may be facing multiple issues stemming from the same noncompliance. You may not even be aware of the noncompliance that is causing the issues.

The solution you should seek should be legal counsel that has a multidisciplinary wide range of knowledge across all tax issues. This way, if a new issue pops up, you will already have someone familiar with your situation that is able to help you, rather than having to seek out another relationship with a relative unknown.

It is also important that your Tax Lawyer & CPA operates near you. Firstly, for tax issues affecting Santa Barbara residents you will want advice from someone who is intimately familiar with the state code and regulations that apply to you so that you do not have to pay for the time that an unfamiliar lawyer spends learning about local tax law. Even if you are strictly dealing with federal tax issues, you will want a representative that you can meet with face-to-face and who can be at your place of business or accompany you to an office audit with ease. David Klasing is an instrument rated private pilot that owns a very fast yet economical airplane. He can be in Santa Barbara within 1.5 hours of getting airborne.

The dual-licensed Tax Attorneys and CPAs at the Tax Law Offices of David W. Klasing have years of experience dealing with every aspect of personal or business tax filings, returns, and record-keeping. We are also well-versed in tax defense advocacy and can represent you if you find yourself the target of an IRS, EDD, CDTFA or FTB audit, eggshell audit, reverse eggshell audit or a criminal tax investigation. We have offices throughout the State of California, so we are well-positioned to serve the needs of our Santa Barbara clients.

Santa Barbara, CA Tax Attorney