How San Diego Tax Attorneys Negotiate with the IRS

The Internal Revenue Service, better known as the IRS, looms large in the United States. A seemingly unstoppable money vacuuming behemoth, it’s easy to feel intimidated by the agency. If the IRS comes a’knocking, you get a’payin’. Not all from your bank account is lost, however. Disputes arise, errors are made, and you may have to stand up to the big, bad IRS. Tax attorneys are just the advocate needed in situations such as this. San Diego tax attorneys are no different, but there are local considerations involved. Here’s how a San Diego tax attorney would negotiate against the IRS and how local nuances affect the outcome. 

Understanding Federal and State Tax Jurisdictions

You’re not a very competent tax attorney if you fail to understand the full scope of federal and state tax jurisdictions. The IRS focuses on federal taxes while California has its own tax agencies including the Franchise Tax Board (FTB), the California Department of Tax and Fee Administration (CDTFA), and the Employment Development Department (EDD). These departments oversee state income taxes, sales taxes, and payroll taxes, respectively. Understanding the jurisdictions between federal and state taxes is crucial if a tax attorney is going to effectively negotiate with the IRS. 

Federal Tax Negotiation Strategies

There are a couple of strategies that San Diego tax attorneys can employ when going toe-to-toe with the IRS. You can’t just “wing it” here, you need thoughtful, effective strategies in order to get what you want and need from your opponent. 

Offer in Compromise (OIC): An Offer in Compromise, or an OIC, allows taxpayers to settle their tax debt for less than the amount owed. If the taxpayer is unlikely to pay the full debt or if it would be too much of a financial hardship. In order for an attorney to successfully negotiate an OIC, they need to gather extensive documentation on their client’s financial situation and whether it’s enough to warrant the compromise. San Diego’s high cost of living is one such consideration. 

Installment Agreements: This is another way to say “payment plan,” the more colloquially known phrase. Plenty of people in tax debt end up in installment agreement arrangements. This allows taxpayers to pay off their debt in a manageable amount of time. An attorney could leverage their knowledge of the local economy in order to lower their client’s monthly payments to a reasonable level. Ideally one that aligns with their clients’ financial situation. 

Penalty Abatement: Those cursed late fees. The IRS imposes penalties for late or low payments of taxes owed. With a savvy attorney, you could end up with a penalty abatement, a reduction or wipe of debt owed. A San Diego attorney could argue that unexpected medical expenses occurred or a natural disaster wiped away savings. Natural disasters like a California wildfire, for instance, could have an effect on whether the IRS agrees to a penalty abatement.

Audit Reconsideration: No one wants an audit from the IRS. The IRS picking through your financials to determine how much you owe can feel final. However, you can request an audit reconsideration. Through your attorney, you can present new information or correct errors that may reduce tax liability. Things like overlooked deductions or credits unique to San Diego can have an affect on whether or not the IRS does a reconsideration. 

California Tax Negotiation Strategies

A San Diego Tax Attorney will have knowledge and understanding of California-specific laws and relief programs that are critical in successful negotiations with the IRS. 

California Tax Amnesty Programs: Now and again, California will offer tax amnesty programs that free up taxpayers to settle their state taxes without the threat of penalties or, god forbid, criminal prosecution. California tax attorneys are familiar with these programs and can negotiate favorable terms with the FTB or the CDTFA. 

State Penalty Relief: California also offers penalty relief programs under certain conditions. There may be specific laws or precedents that a San Diego tax attorney could argue in order to reduce or even eliminate penalties associated with state tax obligations. It’s a way to ask the IRS to “be cool.” 

Voluntary Disclosure Agreements (VDA): If you want to get ahead of the IRS, there’s such a thing as a Voluntary Disclosure Agreement, or VDA. This is for people who have failed to report income or transactions and want to come clean before the dreaded audit begins. An attorney can guide their clients through the process and negotiate terms that minimize the financial impact, even reduce penalties, in compliance with California’s tax laws. 

Local Relationships and Reputation

This is one underappreciated trait that a local tax attorney possesses - local relationships and reputation. Sometimes, it really is about who you know. Tax attorneys work with local IRS officials, other tax attorneys, financial advisors and planners, and other relevant people in authority that can make or break a tax issue in need of resolving. Knowing people, and having a solid or good reputation, a San Diego tax attorney can have more productive and effective negotiations. 

A Local Tax Attorney is a Must-Have

You don’t have to struggle with your tax issue alone, you can be lucky enough to have a San Diego tax attorney as an advocate. Their knowledge and understanding of local tax programs, developed relationships with tax authorities, and familiarity with the local economic conditions make them absolutely critical if you find yourself in a position of having to negotiate with the IRS. It may not be as daunting as you may believe.