Los Angeles IRS Tax Attorney: What LA Taxpayers Need to Know About Federal Tax Problems

Los Angeles taxpayers operate in one of the most complex tax environments in the United States. Between the IRS, the California Franchise Tax Board (FTB), and the City of Los Angeles Business Tax, individuals and businesses can face simultaneous audits, liens, and collection actions from multiple agencies at once.

At Segal, Cohen & Landis, P.C. (SCL), we represent Los Angeles individuals and businesses in IRS disputes, tax debt resolution, and international tax compliance from our Beverly Hills office. This guide explains the key tax issues facing LA taxpayers — and what you can do if the IRS contacts you.

Why Los Angeles Creates Unique IRS Exposure

Los Angeles is not an average tax market. Several factors combine to create elevated IRS audit risk for LA residents:

• The nation’s highest individual state income tax rate: California tops out at 13.3%, and the FTB aggressively mirrors IRS collection actions. An IRS audit settlement does not automatically resolve an FTB dispute — they are separate agencies with separate enforcement powers.
• Entertainment industry income complexity: Royalties, residuals, options, and backend participation are common in LA. These income types trigger IRS scrutiny because they’re easy to underreport, hard to document, and often involve complex multi-party contracts.
• One of the largest international taxpayer populations in the US: Greater Los Angeles has enormous Korean, Chinese, Japanese, Persian, Israeli, and Mexican communities. A significant portion of these residents have foreign accounts, foreign trusts, and overseas gifts — all of which carry FBAR, Form 3520, and PFIC reporting requirements that many taxpayers don’t know about until the IRS sends a notice.
• High concentration of self-employed and gig workers: LA’s creative economy generates large numbers of Schedule C filers — the most-audited return type in the US. Freelancers in entertainment, tech, real estate, and services face above-average audit rates.

The IRS Presence in Los Angeles

The IRS maintains a significant presence in the Los Angeles area. The primary IRS campus serving LA taxpayers is:

The IRS Examination Division (audit) and Collection Division both operate out of the LA campus. If you receive a CP2000 notice, a 90-day letter, an audit appointment request, or a Notice of Intent to Levy, these all originate from or route through this facility.

Common IRS Problems Facing Los Angeles Taxpayers

IRS Audits in Los Angeles

Los Angeles ranks among the highest-audit-rate metros in the country. Common audit triggers for LA taxpayers include:

• Large Schedule C deductions relative to income (common for self-employed entertainment workers)
• Foreign income, foreign accounts, or foreign gifts not reported on FBAR or Form 3520
• Crypto trading activity misreported or omitted from returns
• Business losses claimed for multiple years in a row
• Home office deductions and unreimbursed business expenses
• Significant Schedule E rental losses inconsistent with reported AGI

An IRS audit in LA typically proceeds through three stages: correspondence audit (by mail), office examination (at an IRS office), or field audit (at your home or business). Attorney representation is critical at all three stages — anything you say to an IRS examiner can be used against you. An IRS audit attorney can limit the scope, manage document requests, and negotiate the outcome.

Tax Liens and Levies on LA Properties and Bank Accounts

If you owe back taxes in Los Angeles and haven’t resolved your IRS debt, the IRS can file a federal tax lien against your property — which appears in Los Angeles County public records and damages your credit. A lien can block refinancing, home sales, and business transactions.

More aggressively, the IRS can issue a tax levy — which directly seizes your bank account funds, wage income, rental income, or accounts receivable. Bank levies in LA are typically enforced with 21 days’ notice to your bank. A levy release requires contacting the IRS with a compliance plan before the 21-day hold expires.

International Tax Compliance for Los Angeles Residents

Greater Los Angeles has one of the largest foreign-born populations of any US metro area. Many residents have ongoing financial ties to their home countries — foreign bank accounts, inheritance from foreign parents, investments in foreign funds, or income from foreign employers.

The IRS has been aggressively enforcing international compliance since the FATCA era. If you have or had:

• A foreign bank account with a combined balance over $10,000 at any point during the year → FBAR required (FinCEN Form 114)
• A gift or inheritance from a foreign person over $100,000 → Form 3520 required
• An interest in a foreign trust → Form 3520 or Form 3520-A required
• Foreign mutual funds, ETFs, or pooled investment vehicles → potential PFIC issues (Form 8621)
• Israeli, Canadian, UK, or other foreign pension or tax-advantaged accounts → may require special disclosure

Penalties for non-compliance are severe — starting at $10,000 per form per year and escalating to 50% of account value for willful FBAR violations. If you have unreported foreign accounts, IRS Voluntary Disclosure or Streamlined Filing is likely the correct path.

The FTB Problem: IRS Resolutions Don’t End California’s Pursuit

One of the most common misunderstandings among Los Angeles taxpayers is believing that resolving an IRS issue automatically fixes the California FTB problem. It doesn’t.

The California Franchise Tax Board is an independent state taxing authority with its own audit program, collection tools, and enforcement timeline. The FTB:

• Conducts its own audits independent of the IRS (and can run simultaneously with an IRS examination)
• Issues California tax liens that attach to your real property anywhere in California
• Can intercept California state tax refunds and lottery winnings
• Has reciprocal information-sharing agreements with the IRS — meaning if one agency adjusts your income upward, the other finds out

When we represent Los Angeles clients, we always evaluate both the federal and California state tax exposure simultaneously. A resolution strategy that solves only half the problem leaves you exposed on the other side.

Wage Garnishment in Los Angeles

California has some of the strictest wage protections in the country — but federal IRS wage levies override California law. The IRS can levy a much larger portion of your paycheck than California state collection agencies can.

Under IRS wage garnishment rules, the IRS determines the “exempt amount” based on your filing status and exemptions — everything above that amount goes to the IRS. In practice, this often means losing 50–75% of your take-home pay. A levy release requires contacting the IRS and establishing a compliant resolution — typically an installment agreement or offer in compromise — within days of receiving the garnishment notice.

We have stopped IRS wage garnishments for Los Angeles clients within 24 hours of being retained in many cases. See our Los Angeles IRS tax attorney page for more on our local practice.

IRS Resolution Options Available to LA Taxpayers

If you owe back taxes, the IRS offers several formal resolution programs. The right option depends on your income, assets, and ability to pay:

• Installment Agreement: Monthly payment plan over 6–72 months. Available if you can’t pay the full balance now but can pay over time. Interest and penalties continue to accrue.
• Offer in Compromise (OIC): Settle your IRS tax debt for less than the full amount owed. Requires demonstrating that the offered amount represents the maximum the IRS could reasonably collect given your financial situation. Acceptance rate hovers around 30–40% nationally.
• Currently Not Collectible (CNC): If your allowable living expenses exceed your income, the IRS will temporarily suspend collection. No payments required while CNC status is active — but interest continues.
• Penalty Abatement: The IRS can waive penalties (not interest) if you have reasonable cause or if it’s your first failure-to-pay/failure-to-file offense. First-time abatement (FTA) is available to taxpayers with a clean compliance history.
• Innocent Spouse Relief: If your tax debt arose from a spouse’s (or ex-spouse’s) fraudulent or erroneous reporting without your knowledge, you may qualify for relief from joint liability.

What to Do If You Receive an IRS Notice in Los Angeles

IRS notices are time-sensitive. Here’s what to do when you receive one:

1. Don’t ignore it. Every IRS notice has a response deadline. Missing a deadline — especially a 90-day letter (Notice of Deficiency) — can result in automatic tax assessment and loss of your right to contest in Tax Court.
2. Identify the notice type. CP2000 = income underreport. CP504 = intent to levy. Letter 1058 = final notice before levy. 30-day letter or 90-day letter = audit determination.
3. Don’t respond without counsel. Anything you submit to the IRS in writing becomes part of the record. A misstep in a CP2000 response can expand the audit scope. An attorney should review and draft all IRS correspondence.
4. Preserve all relevant records. Bank statements, receipts, contracts, foreign account records, and tax returns from the affected years should be organized and protected.
5. Contact a tax attorney immediately. Time limits for response, appeal, and Tax Court petitions are strict. A 90-day deadline missed cannot be extended.

Frequently Asked Questions — Los Angeles IRS Tax Attorney

Does Segal, Cohen & Landis serve clients throughout Los Angeles County?

Yes. Our Beverly Hills office serves clients throughout Los Angeles County — including Los Angeles, Santa Monica, Encino, Sherman Oaks, Woodland Hills, West Hollywood, Pasadena, Burbank, Glendale, Long Beach, Torrance, and all surrounding communities. Most IRS matters are handled remotely — you don’t need to visit our office.

How fast can you release an IRS bank levy or wage garnishment in LA?

In most cases, we can obtain a levy release or garnishment suspension within 24–72 hours of being retained. Bank accounts are subject to a 21-day hold before funds are remitted — acting quickly before that deadline expires can prevent loss of the frozen funds. Call us immediately at 310-285-3999 if you have a bank levy in progress.

I have unreported foreign accounts from my home country — what should I do?

Do not wait. The IRS has significantly expanded its FATCA enforcement, and foreign banks now routinely report US-connected accounts to the IRS. If you have unreported foreign accounts, the safest path is voluntary disclosure before the IRS contacts you. Coming forward proactively typically results in significantly reduced penalties vs. a discovered violation. Sam Landis specializes in FBAR, Form 3520, and international voluntary disclosure for LA’s international community.

Can you help with both IRS and FTB problems?

Yes. We handle both federal (IRS) and California state (FTB) tax controversies. Many Los Angeles clients have simultaneous IRS and FTB issues — we address them together as part of a coordinated resolution strategy.

What makes SCL different from a CPA or enrolled agent?

Attorneys hold attorney-client privilege — CPAs and enrolled agents do not. In any IRS matter where there is potential fraud exposure, unreported income, or information you wouldn’t want disclosed in a court proceeding, you need an attorney. Additionally, only attorneys can represent you in U.S. Tax Court. Sam Landis is a licensed attorney with an LL.M. in Taxation — the highest academic credential in tax law.