If you find yourself looking at a Notice of Deficiency from the Internal Revenue Service (IRS) or an IRS audit letter, your next step is important, especially if you know there could be issues with your tax documentation or business compliance.
What is tax compliance?
Tax compliance is important to individual taxpayers and business owners. It means you are correctly complying with tax law. In practice, compliance issues can arise from unfiled returns, payroll tax problems, reporting errors, or failures to meet regularly requirements. Being tax compliant usually keeps the IRS away and builds financial credibility and stability.
Problems arise when there is a failure to file personal or business tax returns accurately or on time, employer payroll taxes are not paid over, or you are over the line with one of many tax regulations. The best time to get help with an issue with the IRS is before they contact you, so where can you get help?
Your options
There are a number of ways to get more information on a tax compliance problem. Let’s look at a few you might consider:
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A friend or business associate: Friends are in your life to be friends, not to provide legal and regulatory analysis of a serious concern you may have about tax compliance. Let your cohort be sympathetic, not your savior.
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The internet: For any issue, there is always the internet, including AI tools and online platforms to guide you through the labyrinth of twists in the tax code. Good idea? Not necessarily. Good information is not legal advice. As with all things internet, information may or may not be accurate. Using AI tools alone cannot provide case-specific analysis, strategic guidance tailored to your tax challenge, or legal representation through a tax controversy. A critical component of an action taken by the IRS is the evidence it may have against you. Taken out of context, online information can steer you off course, especially if you happen to be involved in tax fraud. Also, it is good to remember that communications with AI tools and online platforms are generally not protected by attorney-client confidentiality.
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Experienced legal counsel: When you need the correct answers to your tax problem, or you are mired in a tax crime which the IRS has, or has not yet, discovered, you need a tax attorney who has significant experience with everything from tax compliance to high-stakes criminal tax defense. Unlike online tools, interaction with your tax attorney is confidential. Skilled legal counsel does not guess about tax law and knows how to position your case now to better protect your future and your assets. When civil exposure, audits, or potential criminal implications are involved, a qualified IRS tax attorney can help evaluate risk, protect privileged communications, and develop a strategy tailored to your circumstances.
The choice and the tax problem are yours. When tax compliance issues become serious, experienced tax defense counsel can be critical to protecting your interests. If you have a complicated portfolio or if the IRS has reached out for more information and you need strong, strategic legal representation, contact our law firm today. We work with clients in the U.S. and abroad from our offices in Cleveland and Chicago.
And one more thing…
Tax compliance is not a one-and-done process. The earlier you identify a problem, and the sooner you seek qualified guidance, the more options you may have. You can get the big picture by obtaining your tax compliance report from the IRS. Staying informed on relevant tax issues is also key to remaining tax compliant. Having an understanding of the differences between tax evasion and tax avoidance can help you manage assets, and understanding what triggers an audit could help you avoid one. Inform yourself on basic tax issues by taking a look at our guide, "Since You Asked: 15 Common and Concerning Tax Law Questions & Answers."
