You have received notice that a tax agency intends to examine your tax return, payroll records, or business operations. What next? A Los Angeles tax audit attorney represents individuals and businesses during audits performed by the Internal Revenue Service (IRS), Franchise Tax Board (FTB), Employment Development Department (EDD), and California Department of Tax and Fee Administration (CDTFA).
At Allison Soares: Attorney at Law, we help California taxpayers resolve complex tax controversies involving the IRS, FTB, EDD, and CDTFA. Allison Soares is a California tax attorney with more than 15 years of experience assisting individuals and businesses in audits, EDD appeals, collections matters, and other tax disputes. An adjunct professor at San Diego State University and contributor to publications including Bloomberg Tax and the American Bar Association, Allison combines practical tax controversy experience with a deep understanding of federal and California tax law.
What Types of Tax Audits Does the Government Perform?
During a tax audit, a government agency examines various documents to determine whether you have met your tax obligations. The process can vary by agency, but Allison Soares assists with tax audits performed by several different government agencies at the California and federal levels. She is an IRS audit attorney, an FTB audit lawyer, a sales tax audit attorney, an EDD audit lawyer, and more.
IRS Audits
The IRS conducts federal tax audits. IRS audits may focus on whether you:
- Properly reported all taxable income,
- Maintained records supporting business deductions,
- Correctly claimed credits and losses, and
- Complied with foreign account and international reporting requirements.
Because IRS audits involve complex tax law, LA taxpayers often consult an IRS audit attorney in Los Angeles when responding to IRS requests.
FTB Audits
The FTB conducts California income tax audits, which frequently focus on whether you:
- Correctly reported income earned in California;
- Accurately reported income from states other than California; and
- Properly claimed deductions, credits, and other tax benefits.
The FTB frequently audits taxpayers who split their time between California and another state, work remotely for out-of-state employers, own businesses in multiple states, or earn income from activities occurring both inside and outside California.
CDTFA Sales Tax Audits
The CDTFA conducts California sales and use tax audits, which frequently focus on whether you:
- Properly reported taxable sales,
- Adequately documented exemptions, and
- Have business records supporting the tax liabilities you reported.
Our CDTFA audit attorney can help you respond to sales tax audits in California.
EDD Payroll Tax Audits
EDD audits generally focus on payroll tax compliance and worker classification issues. An EDD audit may examine whether you:
- Properly classified workers as employees or independent contractors,
- Accurately reported payroll,
- Paid required employment taxes, and
- Maintained adequate payroll records.
Businesses throughout Los Angeles, especially in entertainment, media, and consulting, frequently operate using non-traditional employment models. The EDD often chooses to audit businesses that use non-traditional models common in LA, which can make guidance from an EDD audit attorney in Los Angeles essential.
What Happens During a Tax Audit?
You typically learn that the government is performing a tax audit of you or your business when you receive an audit notice. That notice:
- Informs you about the audit,
- Describes the issues the audit will review, and
- Identifies the period of time the audit will cover.
After you receive the notice, we recommend that you consult a tax audit attorney as soon as possible. We can explain what the notice means in your specific circumstances, how the audit will work, and what you need to do next. While the process varies slightly depending on the agency conducting the audit, audits typically involve gathering records and responding to auditor questions or concerns.
How Do You Respond to the Audit Notice?
After receiving the audit notice, you prepare a response. Typically, your response begins with gathering the records that the audit requests.
Then, we review the records to determine whether they support the way you reported the tax issues the agency is now auditing. If we identify concerns, we may draft written explanations citing relevant legal principles to show why the records support the way you reported those issues. We then organize the materials and submit a response package, including the records you gather and written explanations we draft.
What Does the Auditor Do with Your Response?
Once you respond, the auditor reviews the records to determine whether they support the positions you reported. The auditor reviews the records. They may:
- Request additional documentation,
- Ask follow-up questions, or
- Schedule meetings or interviews.
Your attorney typically communicates with the agency on your behalf. After the auditor reviews your response, they determine how to resolve the audit.
If the agency concludes you met your tax obligations, your audit required no changes. If the auditor believes you fell short of your obligations, they inform you of how you fell short and what you can do to remedy the issue.
What Happens After the Auditor Issues Findings?
After the auditor issues findings, you and your attorney review them to determine whether you agree with the conclusions. If you agree with their conclusions, you may draft paperwork explaining how you will address ongoing issues.
If you disagree with the auditor’s findings, you typically have an opportunity to respond before the agency finalizes its decision. We carefully review what the auditor concluded and may respond by:
- Submitting additional records that address the auditor’s concerns;
- Drafting written responses explaining why the findings are incorrect; and
- Clarifying facts that the auditor misunderstood.
After receiving your follow-up response, the agency determines whether to change its findings.
How Does the Audit End?
If we submit a second response, the agency decides whether to maintain, modify, or withdraw its findings. It then issues a final determination explaining the outcome of the audit.
At that point, the audit ends. If we still disagree with the auditor’s conclusions, we might ask someone else to review the decision. Depending on the agency involved and the procedures available, someone within the agency or a judge may review the auditor’s decision to decide whether they understood the facts and correctly applied the law to them.
Why Choose Allison Soares for Tax Audit Defense?
Tax audit responses require an understanding of tax law, administrative procedures, and the practical realities of dealing with government agencies. Experienced counsel can help you navigate these challenges while keeping you focused on your business, career, and personal responsibilities. For more than 15 years, Allison Soares has represented individuals and businesses before the IRS, FTB, EDD, and CDTFA. She focuses on resolving tax controversies efficiently and developing practical solutions tailored to your circumstances.
If you have received notice of a tax audit, contact us to learn more about our tax audit representation services.
Legal References Used to Inform This Page
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