Federal & California Audit Defense
With the federal and state governments increasingly in need of revenue to operate the societal machinery, revenue agents are becoming increasingly aggressive and much less forgiving in the area of penalty abatements. Both the federal and state taxing authorities are going after non‐filers, and a recent trend reflects increased scrutiny in the area of information reporting, such as foreign bank accounts and information regarding foreign parent and subsidiary corporations. The Board of Equalization in California, which principally manages California’s collection of sales and use tax revenues, has been sending out “self‐audit” requests, asking taxpayers to audit their own books and records for unpaid sales and use taxes for open periods (unbelievably, the State now wants us to do their job). With the recent implementation of Financial Accounting Standard Board Interpretation 48 (FIN 48), the requirements for audits and reviews of financial statements now compel companies to effectively create a “road map” for all of the uncertain tax positions taken in returns for open years (both for federal and state purposes), taking into account tax, interest, and penalties—and without consideration for the likelihood of scrutiny concerning the issue.
At The Pun Group, we believe that it takes more than just knowledge of the federal and state tax law to successfully defend a client under audit. We take a more proactive approach in order to manage the audit and auditor and to minimize the time required by the client to prepare information and interface with the taxing authority. Managing the scope of the audit is the key to success when confronted with a potential assessment. When necessary, we have the experience to negotiate with the IRS or Franchise Tax Board to reach a settlement or “offer in compromise” where real exposure is present for our clients.
If you have been contacted by the Internal Revenue Service, Franchise Tax Board, or Board of Equalization regarding an income, sales/use, payroll, or property tax issue, contact us for assistance. We can help mitigate the tax and the worry associated with a pending audit.