Recent Changes in IRS Enforcements

In recent months, the Internal Revenue Service has becoming increasingly strict in terms of audits and IRS enforcements. In December of 2011, the audits conducted by the IRS had risen by 11 percent. The IRS attributes the increase in audits to it being a method of assisting the government in curtailing the current budget deficit issue.

NPR reports that the main targets include big businesses, charities, and wealthy taxpayers . It was reported that in 2010, the IRS audited more than 8% of income tax returns with incomes above $1 million.

In addition to the increase in audits, the Internal Revenue Service enforcement action in areas with large minority areas has doubled the rate of the general population. An analysis conducted by TaxLifeboat, an online site dedicated to helping taxpayers with their IRS issues, reported that the unbalanced ratio of IRS tax compliance measures in areas heavily populated by minorities is a result of the IRS’s reliance on increased automation and allocating more enforcement resources. The unintentional result is forceful targeting of low income minority individuals who do not have the substantial means or education to overcome these formidable challenges.

The IRS failed to respond to a request for comment.


Segal, Cohen & Landis
9100 Wilshire Blvd. Ste. 601E
Beverly Hills, CA 90212
(310) 285-3999

IRS to Increase Oversight of Tax Return Preparers

Beginning in 2011, The IRS will step up its watchdog duties and require all paid tax return preparers who sign, prepare, or assist with preparing federal tax returns to have a Preparer Tax Identification Number (PTIN). Paid tax preparers must apply for this PTIN and use it on all tax returns they prepare.

California, New York, and Oregon are the only states that have set licensing requirements in place. Now the IRS plans to enforce stricter standards on all preparers who are not CPAs, attorneys, or Enrolled Agents. (These tax preparers already have strict licensing standards in place.) Nonexempt tax preparers will soon be required to complete continuing education courses on current tax law. They will also be required to pass an IRS competency exam, be current on all of their own tax return filings and pay an annual renewal licensing fee.

The IRS believes the stricter oversight will help reduce fraud, improve compliance and close the tax gap. Faulty or fraudulent tax preparers could lose their PTIN license and not be allowed to continue preparing tax returns.

The IRS will phase in some of these rules during 2011, giving non-licensed preparers a grace period to comply. Taxpayers can expect better professional standards when they pay someone to prepare their income tax returns in the future.


Segal, Cohen & Landis
9100 Wilshire Blvd. Ste. 601E
Beverly Hills, CA 90212
(310) 285-3999

California’s to Send Notices to Select Taxpayers with Cancelled Debt

The Franchise Tax Board began sending tax notices to some taxpayers who have received a 1099-C form for cancelled debt for 2007 or 2008. Depending on the circumstances, cancellation of debt may be taxable income to the recipient.

California conforms to the Mortgage Forgiveness Debt Relief Act of 2007. It allows taxpayers to exclude from income any qualified mortgage debt that was cancelled by their lender resulting from a foreclosure, “short sale”, or loan modification. However, the rules for California are different. The amount of qualified mortgage debt is less than the federal amount, and California has a lower allowable exclusion.

Under both laws, debt forgiveness on other properties, such as second homes, rentals, investments, or other business properties, is not excludable from income.

The FTB is sending notices to taxpayers who may have COD income on “non-qualifying properties”. They are investigating whether this COD income should have been included on the taxpayers’ tax returns for 2007 & 2008. They advised taxpayers this COD income may still be excludable under other provisions, such as insolvency or bankruptcy. Taxpayers are urged to reply promptly in order to avoid further action by the FTB, such as audits, penalties, and/or tax assessment.

If you receive this notice from the FTB, and have any questions, contact our office.


Segal, Cohen & Landis
9100 Wilshire Blvd. Ste. 601E
Beverly Hills, CA 90212
(310) 285-3999

Cancellation of Debt and Home Foreclosure

If a debtor owes money to a bank and the bank forgives or cancels any part or all of the debt, the canceled amount may be taxable income.

When a homeowner is “upside down” on their mortgage debt, and is lost in a home foreclosure, the taxpayer may incur cancellation of debt income.

Generally, when a bank renegotiates or forecloses on a loan, if the loan is a recourse loan, the homeowner may still owe the bank for unrecovered mortgage debt. This cancellation of debt may be considered income to the homeowner. This is true if the debt is either partially or completely forgiven through a mortgage workout, or if the loan ends up in foreclosure.

With many homeowners seeking help in renegotiating their mortgages and others losing their homes through foreclosure, Congress realized this was a real problem area, so they passed legislation to fix it. The Mortgage Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. This debt relief is available for tax years 2007 through 2012.

Under the Mortgage Forgiveness Debt Relief Act of 2007, a homeowner may be able to exclude from tax up to $2 million of debt forgiven on their principal residence. The debt must have been home acquisition debt in order to qualify.

Acquisition debt is debt used to buy, build or improve a home. Refinancing and taking on additional debt in excess of $100,000 is normally not acquisition debt.

For example, a homeowner bought their home years ago for $200,000. Over the years the homeowner did multiple refinances, taking additional equity out of the home, and now they owe $450,000. If the homeowner then loses the home in a foreclosure, he probably has at least $250,000 of cancellation of debt income. This situation usually results in debt that cannot be excluded.

In some cases, other kinds of tax relief – based on insolvency, for example – may be available. Taxpayers who have lost their home in a foreclosure, or those that have renegotiated their mortgages, decreasing the balance owed, may end up with a large tax bill. These taxpayers should seek professional tax advice to resolve the problem.


Segal, Cohen & Landis
9100 Wilshire Blvd. Ste. 601E
Beverly Hills, CA 90212
(310) 285-3999

Collection Appeals Program

The Collection Appeals Program (CAP) was implemented in 1996 by the IRS as an administrative appeal process to appeal a notice of Federal Tax Lien, levies, seizures, and improper review, denial or termination of an installment agreement. There are different procedures that must be followed when filing a Collection Appeal request for appealing cases involving liens, levies, and seizures and when filing a Collection Appeal Request for rejections or terminations of installments.

After a Notice of Federal Tax Lien has been filed or before a levy has been made, a taxpayer is allowed a “hearing” under Collection due Process (CDP). There are two types of CDPs: a statutory CDP and an equivalency CDP. A statutory CDP is filed within thirty days of a tax lien being issued or within 30 days after a taxpayer receives a collection letter or form. If the CDP is filed within those 30 days, the taxpayer has the right to present their case for judicial review if they do not agree with the Appeals result. Under a statutory CDP, all IRS collection action is stopped, however the statute of limitations is tolled. The second type of CDP is called an equivalency CDP. An equivalency CDP is filed 31 days after a tax lien has been filed but before a one year period. In this case, the taxpayer has full administrative appeals rights however in the case that the case is rejected, the taxpayer cannot go to court. Another important fact to note is that in the case of an equivalency CDP, the statue of limitations is not tolled.

In the case that a taxpayer receives notification that the IRS improperly reviews, rejects or terminates an installment agreement request, a taxpayer may appeal the denial of the installment agreement by requesting an appeal under the Collection Appeals program (CAP). Another example of when a Collection Appeals Request can be filed is in the case where a taxpayer was paying under an installment agreement and missed a few payments. Should the IRS state that the taxpayer can no longer have the installment agreement and that the balance owed must be paid in full, the taxpayer may appeal the termination of the installment agreement by requesting an appeal under the Collection Appeals program (CAP). When a Collection Appeals request is filed, a response is issued more quickly than in the case of a CDP due to the 5 day turnaround goal. However, it is important to keep in mind that in the case of a CAP, the Appeal’s administrative decision is final.


Segal, Cohen & Landis
9100 Wilshire Blvd. Ste. 601E
Beverly Hills, CA 90212
(310) 285-3999

IRS Audits

IRS Audits

IRS audits can be really scary but here is what you need to know and this information should alleviate some stress.

IRS Audits are conducted by either a Tax Compliance Officer or a Revenue Agent. The job of both is to confirm the accuracy of the information reported on a tax return.

Tax Compliance Officers conduct audits from their IRS offices. Revenue Agents, since they are generally more experienced, travel into the field (to a taxpayer’s home or authorized agents office) to review and examine records as well as analyze whether or not the information on the tax return is consistent with the provided records.

There are three different types of audits. They are tax compliance audits, office audits and field audits.

Compliance Center Audits are done by letter and are based on discrepancies between information provided on a tax return and information provided by a third parties such as W-2s and 1099s.

Office audits can be simple correspondence between the taxpayer and auditor (i.e. just sending the requested information to the auditor) or can require a visit to the local IRS office. Generally, these audits center around specific issues on a tax return. Often times, if the requested information is provided (either by mail or by a visit to the auditor’s office), the audit can be quickly and easily resolved.

Generally field audits are conducted at a taxpayer’s place of business. However, often times this can disrupt business therefore it is preferable to conduct the audit at the auditor’s office or at the tax payer’s representative’s office. Most of the time, auditors will accommodate such an arrangement.

Information Needed to Conclude the IRS Audit:

Submitting the requested information is crucial. Information is requested in several different ways: through an information document request (aka “IDR”), summons, third party summons, or interview.

An IDR is a written request for documentation. Usually the request is laid out in an outline format. The IDR will tell you what line on the return is at issue as well as the supporting documentation that needs to be provided in order to resolve any such discrepancies.

A summons is a more forceful way of requesting information. Summonses can be issued to the taxpayer directly or to a third party. An example of a third party summons is if a taxpayer fails to provide bank statements, an auditor can issue a summons to the bank in order to obtain the bank records that the taxpayer either can’t provide or fails to provide. Furthermore, a summons is the only way an auditor can actually require a tax payer to make a visit to the auditor’s IRS office.

Again, providing the requested information is very important. Failing to submit the information will undoubtedly lead to increases in the tax liability. Often times just submitting the proper documentation will be enough to avoid an increase in tax. Conversely, it is important to not give too much information either. Giving information unrelated to the request could open up a return to more inquisitions (that were not originally part of the initial audit). An over abundance of information could lead to adjustments on certain items of the tax return that weren’t even in question to begin with.

At the conclusion of the audit, a report will be issued based on the auditor’s findings. Once the report is issued, there are a number of different options available to a taxpayer. The taxpayer can accept the report’s findings, can challenge the findings by appeal or can challenge the findings by filing a petition in tax court. Therefore, an audit report with an increase in tax liability might not be the ultimate finding. A taxpayer does have options after an audit report is issued.


Segal, Cohen & Landis
9100 Wilshire Blvd. Ste. 601E
Beverly Hills, CA 90212
(310) 285-3999

How Much Should a Tax Attorney Charge?

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How Much should an IRS Tax Attorney Charge?

What is the role of IRS tax attorney? How is an IRS tax attorney different from a regular attorney? What kinds of issues does an IRS tax attorney deal with? What can an IRS tax attorney do to help people with different kinds of tax problems? Does an IRS tax attorney work for the government? Can an IRS tax attorney help me if I’m not a big business? Is hiring an IRS tax attorney expensive?

If you are an individual who presently needs or may sometime require the assistance of an IRS tax attorney, or are considering becoming an IRS tax attorney yourself, you may have these types of questions about the job description of an IRS tax attorney. Indeed, if you find yourself in the above situations, it is helpful to understand just what an IRS tax attorney does every day. Below is a condensed list of several important roles of an IRS tax attorney. Following the list, each role of an IRS tax attorney is explained in greater detail:

  1. IRS Tax Attorney Role #1: IRS Tax Attorney for the IRS
  2. IRS Tax Attorney Role #2: Counsel and Consulting
  3. IRS Tax Attorney Role #3: Litigation Assistance
  4. IRS Tax Attorney Role #4: Auditing Assistance
  5. IRS Tax Attorney Role #5: Tax Crimes Representation
  6. IRS Tax Attorney Role #6: Levies and Liens Assistance
  7. IRS Tax Attorney Role #7: Estate Tax Assistance

IRS Tax Attorney Role #1: IRS Tax Attorney for the IRS

The moniker “IRS tax attorney” can be a somewhat confusing, because it can suggest several meanings. First, “IRS tax attorney” can refer to a person who is an attorney employed by the IRS. The second possible meaning of “IRS tax attorney” is actually quite an opposite role–this type of IRS tax attorney would be someone who represents an individual or business in legal matters where the opposing counsel would often be the first type of IRS tax attorney. In short, the IRS has its own attorneys who practice law for the IRS, and individuals or businesses may hire a private attorney who may also be referred to as an IRS tax attorney, but who will advocate for the client rather than the IRS. IRS tax attorneys are available to help individuals and businesses with many tax problems and in a range of financial situations. Further mentions of the term “IRS tax attorney” with respect to the roles of such an individual may be taken to imply the second definition–an IRS tax attorney retained by a private individual or business.

IRS Tax Attorney Role #2: Counsel and Consulting

A role in which an IRS tax attorney can be very helpful to private citizens or businesses is that of a consultant. To the layperson or business owner, both tax regulations and law can be very confusing and complicated. An IRS tax attorney can not only explain which regulations apply to his or her client and in what ways, but the IRS tax attorney can also offer advice to the client regarding applicable tax loopholes, strategies, and ways for him or her be subject to the minimum amount of tax. Because he is an expert in both tax and law, the IRS tax attorney is the optimum advocate in cases like this.

IRS Tax Attorney Role #3: Litigation Assistance

Though nobody would wish to be in a tax situation so bad that it ends up in court, should you find yourself in such a position, you’ll want to have an IRS tax attorney on your side. While your trusted family attorney may be fine for handling your simple divorce, tax litigation requires a trained specialist with expertise in taxes as well as law, who is used to doing battle against the IRS’ own lawyers in the courtroom. You guessed it: an IRS tax attorney.

IRS Tax Attorney Role #4: Auditing Assistance

Besides being taken to court for tax-related reasons, being chosen for an audit is another nightmare of taxpayers. In this case, too, an IRS tax attorney can be very helpful. He can walk you through the entire process, provide helpful insights the average person would certainly miss, and lend you support during that trying time. In some cases, your IRS tax attorney can even negotiate with the IRS to minimize any extra taxes you might owe as a result of the audit.

IRS Tax Attorney Role #5: Tax Crimes Representation

If you have committed tax fraud, or have simply failed to pay your taxes for whatever reason, you may be charged with commission of a tax crime. In a case like this, an IRS tax attorney would become your new best friend. Your IRS tax attorney would work hard to minimize the damage to your financial situation, reputation, and general quality of life due to the tax crimes committed. Of course, crimes come with consequences, but each situation is different, and having an expert IRS tax attorney on your side would win you the best possible outcome.

IRS Tax Attorney Role #6: Levies and Liens Assistance

If, for some reason, an individual cannot pay his or her taxes, the IRS may, in some cases, place levies and/or liens upon the assets of that individual. This means that the government can seize or take ownership of property and funds to ensure that the taxpayer’s debt is settled. During this process, too, it is extremely helpful for an individual to retain an IRS tax attorney as an advocate. The IRS tax attorney will be able to argue the taxpayer’s case to the government, and find the best-case scenario for the individual, again by drawing upon his or her extensive and specialized body of knowledge.

IRS Tax Attorney Role #7: Estate Tax Assistance

Though many of the situations above may seem dire or extreme, estate tax matters are something that most individuals have to deal with at some point in time. When a person passes away, those who inherit his or her worldly possessions are often taxed on their inheritance. Because of this, an IRS tax attorney is helpful for both the senior planning his or her estate, and those who inherit the goods of the deceased. An IRS tax attorney can help with estate planning by suggesting ways to minimize the taxes that will be owed by the loved ones later on. Similarly, the IRS tax attorney can help inheritors after the fact by providing the same type of service. IRS tax attorneys can advise inheritors regarding investments or payment plans that may make inheritance tax burdens more bearable.

As we can see, an IRS tax attorney may work for a variety of groups or individuals and perform a variety of services for his or her clients. Indeed, the job of an IRS tax attorney can be exciting because, though an IRS tax attorney works with a very specific type of law, he or she might take on many types of cases throughout his or her career. This affords the IRS tax attorney the advantage of both being a specialized expert in a particular field, and also allows him or her to avoid the monotony that can also come with working in a specialized field. If this is something that appeals to you, you might consider becoming an IRS tax attorney yourself!

Becoming an IRS Tax Attorney

Like anything worth doing, becoming an attorney takes a lot of time and effort. Becoming an IRS tax attorney specifically is no different, and, in fact, requires the development of skills and knowledge beyond that required to practice general law. An IRS tax attorney needs to have studied tax law, which is an area of specialization that the IRS tax attorney would focus on either during or in addition to their law school education. For this reason, an IRS Tax Attorney would have a more extensive and specific body of knowledge when compared to regular attorneys.

Thus, the process of becoming an IRS tax attorney takes a lot of focus and dedication, and an individual who wishes to become an IRS tax attorney should start that process as early as possible. Several helpful tips for successfully becoming an IRS tax attorney are listed below, and subsequently explained in greater detail:

Becoming an IRS Tax Attorney Tip #1: Cultivate Desire and Motivation

The first thing an individual needs to find success in any endeavor is a desire to achieve and sufficient motivation to see a goal through, even when it is difficult. The road to becoming an IRS tax attorney is long and challenging, and will require a great amount of both desire and motivation. Those who would like to become IRS tax attorneys must be willing to be in school for a long time, and must be up to the challenge of meeting stringent requirements in almost every arena. Candidates must also pass grueling exams, and be able to keep up in a very competitive environment.

Becoming an IRS Tax Attorney Tip #2: Get Informed

Because the dedication of one’s life to the pursuit of becoming an IRS tax attorney is a very big investment, it is best to know exactly what you are getting into before you start down that path. Research in detail the job description of an IRS tax attorney. Look into educational programs and financial obligations. Find an IRS tax attorney in your area and interview or shadow him or her. You can never get too much information!

Becoming an IRS Tax Attorney Tip #3: Focus on Your Education

In order to achieve the end goal of becoming a successful IRS tax attorney at a prestigious firm or organization, it is extremely important that you maintain an excellent academic standard. Start as early as you can, and dedicate yourself to your studies. Good grades in high school will allow you to attend a good university, where academic success will be your key to being accepted to the right law school.

Becoming an IRS Tax Attorney Tip #4: Know the Right People

In addition to academics, networking is another key to success for an individual who wishes to become an IRS tax attorney. Maintaining connections with influential individuals in fields or organizations related to law and tax law can often open many doors, including internships, letters of recommendation, and even jobs!

Becoming an IRS Tax Attorney Tip #5: Establish the Right Background

In today’s job market, most employers are looking for people who already have experience in their desired profession. Don’t let yourself become a victim of this stipulation. If you want to be an IRS tax attorney, start as soon as possible to get any type of experience working, volunteering, or interning in a related field. Every little bit counts, and experience will be a great asset later on.

Becoming an IRS Tax Attorney Tip #6: Do Your Homework

If your goal is to become an IRS tax attorney and you have not already attended college, do some research. Find a school within your specifications that has a good reputation and offers a pre-law program, or law-related classes. While the university you attend is not the biggest factor in being accepted to law school or being hired as an IRS tax attorney, it is impressive when you are a graduate of a reputable institution.

Becoming an IRS Tax Attorney Tip #7: Make Good College Choices

Similar to the university you choose to attend, the classes you choose to take as a student can affect your future success. If you want to become an IRS tax attorney and your school offers a pre-law track, take advantage of it. If no such program is offered, take law-related elective courses or declare a law-related major. Take courses that challenge you. An IRS tax attorney needs to be intelligent and motivated, and intelligence and motivation can be indicated by a student’s course choices and load.

Becoming an IRS Tax Attorney Tip #8: Be Smart About the LSAT and the Bar

The biggest step in between college and law school is the dreaded LSAT, and the even bigger step after law school is the Bar Exam. The LSAT is large deciding factor for the admissions committees of most law schools, and the Bar Exam determines if an attorney is eligible to practice law. Because of this, it is essential that a future IRS tax attorney be prepared on both LSAT and Bar Exam days. Take the LSAT test early, so that you’ll have time to retake it if your scores are not what you would like them to be. Avail yourself of the many study helps and classes for both the Bar and the LSAT available to aspiring lawyers. Form study groups with your peers or those who have already taken the test. Most importantly, commit to prepare for the LSAT and the Bar Exam in your chosen way, and follow through.

Becoming an IRS Tax Attorney Tip #9: Make Law School Connections

Once in law school, you will need to work hard, but it will also benefit you greatly if you get to know the people around you. More than likely, at least one professor or fellow student is, has been, or wants to become an IRS tax attorney. These people will also likely have other connections that can be helpful to you. And, if you establish a good rapport with them, you may be able to work with or for them, or use them as a reference for employment elsewhere.

Becoming an IRS Tax Attorney Tip #10: Learn to Prioritize

After all the education and exams are over, a new IRS tax attorney can enter the job market and prepare for life as a lawyer. Because law is a competitive field, rookie IRS tax attorneys must be prepared to start at entry-level jobs that often require very long hours. Before you get in over your head, get your priorities straight. Figure out what is most important to you, and how much time you will be able to devote to your job. Decide which things can be placed at a lower priority than your goal of becoming an IRS tax attorney, and those that are most important to you. Deciding these things before you enter the workforce will help you live your life as an IRS tax attorney to the fullest.

Becoming an IRS Tax Attorney Tip #11: Know How to Sell Yourself

It is well known that lawyers must be well spoken and convincing in a court of law. But, aspiring lawyers and IRS tax attorneys must also be convincing and well spoken as they attempt to find a job in their chosen profession. Before you enter the job market, prepare to present yourself in the best and most professional way possible. Create an exceptional resume, secure good references, and prepare to highlight your skills and positive attributes in an interview situation. Remember that the field of law is very competitive, so look for ways that you are unique, and things you may have to offer that others do not. Above all else, be confident in your skills, accomplishments, and hard work!

An IRS tax attorney has the potential to help many people in frustrating tax situations throughout his or her career. Not only is the career lucrative and engaging, but it also provides the satisfaction of knowing that you have made a difference in the lives of others. If you need the assistance of an IRS tax attorney for your tax situation, look to the internet, phone book, friends or colleagues, or non-profit organizations for help in finding an IRS tax attorney who will be well-suited to your particular needs and financial situation. If you, yourself, would like to help others by becoming an IRS tax attorney, consider the tips above and remember first to help yourself to achieve that goal successfully.