Frederick M. Okamura
Attorney At Law

Tax Law

THIS LAW FIRM PROVIDES PRINCIPLED AGGRESSIVE REPRESENTATION OF TAXPAYERS RIGHTS.

  

AUDIT

COLLECTIONS

APPEALS

PENALTIES

INNOCENT SPOUSE RELIEF

TAX CRIMES

EMPLOYEE PAYROLL TAXES

TRUST FUND RECOVERY PENALTIES

ESTATE TAX

INHERITANCE TAX

  

"Next to being shot at and missed, nothing is really quite as satisfying as an income tax refund.” - F. J. Raymond, humorist

 

"Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose the pattern which will best pay the Treasury; there is not even a patriotic duty to increase ones taxes."  -Judge Learned Hand, Helvering v. Gregory (1934)

 

"Unfortunately, the fact that an IRS publication is unclear or inaccurate does not help the taxpayer. Well-established precedent confirms that taxpayers rely on such publications at their peril." Miller v. Commissioner of Internal Revenue, 114 T.C. 13 (2000)

 

 

Power of Attorney for representation before the IRS

Power of Attorney for representation before the Oregon Department of Revenue

 


THE ANATOMY OF AN IRS TAX CONTROVERSY

 

I AM BEING AUDITED

Contacting your CPA is generally the best first step in an income tax audit, however if you have particular concerns regarding specific issues it may be best to consult with a tax attorney who understands tax procedure and can help you to plan your litigation strategy from the outset.

 

I HAVE RECEIVED A SUBPOENA

When you, or your spouse, have received a Subpoena/Administrative Summons you must physically show up at the designated time but you may simply refuse to answer questions under a proper assertion of your 5th Amendment rights.  Under the Omnibus Taxpayer Bill of Rights, IRC (Internal Revenue Code) §7521, the IRS must stop a taxpayer interview whenever a taxpayer requests to consult with an attorney.   Furthermore, IRS procedures specify that taxpayers should be allowed at least 10 business days to secure representation once a request is made to consult with a representative.  A recent Treasury Inspector General report found that in 19.2 percent of cases the revenue officer did not follow the appropriate procedures that help ensure compliance with the direct contact provisions of the law.  A taxpayer can file a civil suit seeking monetary damages against the IRS if an IRS employee intentionally disregards these provisions by denying a taxpayer the right to appropriate representation.

 

TREASURY AGENTS ARE AT MY DOOR WITH A SEARCH WARRANT

A search warrant can authorize government agents, including the IRS Criminal Investigation Division, to search your home, business, or CPA’s office, and seize evidence, including computers, phones, thumb drives, hard files, account ledgers, etc.  If this occurs, contact legal counsel immediately.  You should also ask that the agents delay the the search until counsel can be present.

If the search proceeds without counsel present, you should:

  • Ask for a copy of the search warrant and read it carefully to ensure the agents do not exceed the warrant’s authority.
  • Ask to review the agent’s identification and provide you with their card.  This will help you to determine whether the matter is civil or criminal.
  • Obtain receipts for all items removed.
  • If the agents are seizing computers or other electronic data ask them to provide backup copies.  The agents are not required to do so, but often will, particularly if the data is critical to ongoing business operations.
  • You may photograph or film the agents as they conduct the search, but this can be counterproductive if it interferes with the agent's duties.
  • Take notes of the places searched and the items seized and notify agent in charge if they appear to be exceeding the scope of the warrant.  If you are not recording the search, take notes of any statements made by the agents during the search.
  • You do not have to help the agents conduct their search, but you may wish to assist them in finding a particular item or document simply to prevent unnecessary disruption and to get them off of your property as quickly as possible.
  • You should politely decline to answer questions without a lawyer present.  See I HAVE RECEIVED A SUBPOENA above.  Your executives and management should also be instructed to assert their right to consult with a lawyer before being interviewed by the agents.
  • Depending upon the nature of the warrant and the extent of the disruption to your operations, you may wish to send some or all of your employees home for the day, while the search is conducted.  We will assist you with educating your employees after the search and making the decisions about whether to provide them with counsel, at company expense.

 

I RECEIVED A “30 DAY LETTER”

You have 3 basic alternatives after receiving a “30 day letter” (notice of proposed deficiency)

1.            Pay the deficiency, leaving available a refund claim (note that the statute of limitations for refund claims requires that the claim be brought     
               within three years of the original filing date, or two years of the payment);

2.            Ignore it, in which case the IRS will follow up with a “90 day letter” (notice of deficiency) –see below; or

3.            File the Protest, requesting an administrative appeal.  (This step is usually required in order for the taxpayer to obtain prevailing party attorney 
               fees and litigation costs from the IRS if the case subsequently goes to trial.)

 

I RECEIVED A “90 DAY LETTER”

This is your ticket to the United States Tax Court, the only judicial appeal available to you without first having to pay the tax, but you must file the petition within the 90 day period set forth in the notice.  If you miss this deadline you lose this ability and you will be required to pay the tax to file a refund suit in order to plead your case before a judge.  You should retain an attorney as soon as possible, before your 90 days are up, so your attorney can prepare an effective Tax Court petition.

 

WHY IS THE IRS CONCERNED WITH A TAX RETURN FROM SO LONG AGO?

Generally the IRS has three years to assert tax examination changes, beginning when the subject tax return is due or filed, whichever is later.  Note that the clock does not start until the return is actually filed.  Furthermore, the statute of limitations is extended to six years if income is understated by 25% or more (whether through statements of income or overstated deductions) and the facts giving rise to the understatement are not disclosed.  The final exception is for cases of fraud, where there is no limitation on prosecution.  After the tax is assessed, the IRS has ten years to collect on the tax debt or penalties assessed.

 

I HAVE RECEIVED A NOTICE OF INTENT TO LEVY

If you have received a Notice of Intent to Levy or a Notice of Filing of Tax Lien you may still be able to challenge the validity of the assessed tax by obtaining a Collection Due Process hearing, or by filing a Request for Audit Reconsideration.  Of course, important, and relatively short, time restrictions apply and you should seek the advice of counsel immediately.

 

I DON’T DISPUTE THAT I OWE THE TAX, BUT I CAN NOT AFFORD TO PAY

You may contact the IRS directly to set up an installment arrangement.  You may also qualify to settle your IRS tax debt for less than the full amount you owe.  Complete information can be found on the IRS website by searching for “Offer in Compromise.”  You may also submit an Application  for Settlement Offer to the Oregon Department of Revenue, or set up a payment plan with the Department online.  In some circumstances it may be important for you to have the assistance of counsel in preparing your offer, or appealing a denial of your submitted offer, but you should not be taken-in by late night infomercials.  If it sounds too good to be true, it probably is.

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