Audit Repesentation: Federal and State

We understand that one of the most dreaded letters you can receive is one beginning with the words "your tax return has been selected for audit."

It has been our experience that most tax returns selected for audit were chosen because items on the return were viewed as being “suspicious” by the Internal Revenue Service or a state-taxing agency. As a result, it may be very dangerous to attempt to represent yourself in an audit even if you do not believe that you did anything wrong.

Auditors are trained on how to interrogate taxpayers so that unreported income can be "discovered" and certain deductions can be disallowed. Taxpayers representing themselves without any knowledge about how the “system” works are at a major disadvantage.  People representing themselves also run the risk of being criminally prosecuted for “making a false statement.”  

The attorneys at the Law Offices of Stephen Moskowitz, LLP have a successful history of representing countless numbers of taxpayers through the audit process. Our attorneys assist our clients with developing strategies for audits and Internal Revenue Service Appeals with unparalleled success.

Our attorneys are skilled at framing appropriate responses and drafting protests to the Internal Revenue Service and state in the audit setting. When helpful to a client's case, our law firm represents our clients at every administrative and judicial level.

Our attorneys have handled matters involving complex offshore abusive tax haven activities, controversies arising out of the formation of closely held corporations, partnerships, and joint ventures.  

Our attorneys have also represented clientele in a broad range of federal and state controversies involving the deductibility of ordinary business expenses, accusations of unreported income, imposition of civil fraud penalties, accuracy penalties, substantial understatement penalties, and negligence penalties.

As a general rule, we appear before the taxing authority on behalf of our client, and either at an audit or other hearing, to avoid the client being interrogated by the Internal Revenue Service or a state taxing agency. In most cases, the law allows our law firm to answer all of the questions presented by the government.

Often the Internal Revenue Service disallows taxpayers' business expenses and other similar deductions taken on their tax returns because they cannot provide specific documentation to substantiate claimed deductions. In many of these cases, we are able to assist our clients either reconstruct their recollection or use alternative methods to substantiate a deduction. Our attorneys are also experienced with defending accusations of unreported income and other accusations which could lead to an auditor's referral to the criminal investigation division.

A few examples of audit representation the attorneys of the Law Offices of Stephen Moskowitz, LLP have handled are described below. 

The Miscalculated Income

After receiving an audit notice, our clients in this case discovered that they inadvertently committed an error in calculating the income they received and therefore under-reported a hundred thousand dollars on the income tax return being audited. Given the amount of taxes involved, our clients were facing a serious risk of a criminal referral by the auditor or the imposition of substantial civil fraud penalties in addition to the tax liability and interest the clients knew they would owe.

Our attorneys successfully assisted our clients in complying with the voluntary disclosure procedure to the Internal Revenue Service with regards to the error to minimize their criminal exposure after the audit had already been initiated.

The attorneys of the Law Offices of Stephen Moskowitz, LLP were then able to convince the auditor not to make a criminal referral or even assess civil fraud penalties. The attorneys of Law Offices of Stephen Moskowitz, LLP then worked out payment arrangements with the Internal Revenue Service so that our clients could pay back the additional tax liability within a reasonable time and without any enforced collection activity of any kind.

The Unwelcome Auditor

Our clients were facing an extremely aggressive Internal Revenue Service auditor who believed that income was not reported on the income tax return being audited. At one point, the auditor issued a series of summonses demanding that our clients allow him to personally interview them in their home. The auditor wanted to use these summonses not only to interview our clients, but also search their home.
The attorneys at Law Offices of Stephen Moskowitz, LLP were able to finally convince the Internal Revenue Service that it was illegal for them to try to search a home of a taxpayer in this manner. However, this was not an easy process. In the course of this dispute, the Internal Revenue Service issued summons after summons and even threatened to file an action in Federal District Court to allow them to enter the residence of our client.
The Offshore Tax Shelter

Our firm has represented numerous clients who were accused of participating in prohibited offshore tax shelters. In most these cases, not only did the IRS propose to assess the client with a large tax liability, penalties, and interest, they also sought to charge the client with numerous currency offenses. Our attorneys achieved an extremely favorable settlement for our client and convinced the IRS not to assess any currency related penalties.

The Flood

Our clients facing an audit from the Internal Revenue Service in this case had always kept meticulous records of their significant business expenses. Unfortunately, all of these records were lost due to a flood which had taken place many months before the clients received notice of the audit by the Internal Revenue Service. Prior to retaining the attorneys at the Law Offices of Stephen Moskowitz, LLP, the auditor handling the audit indicated that he would disallow virtually all of the business expenses resulting in a substantial assessment of tax, penalties, and interest.

The attorneys at the Law Offices of Stephen Moskowitz, LLP were able to assist our clients in reconstructing business expense records through alternative means for the majority of the expenses which were originally disallowed by the auditor and convince the auditor to allow most of the expenses that he had disallowed.

If you have received a notice of an income tax audit by the Internal Revenue Service or state tax agency, it may be imperative for you to consult with an experienced tax attorney immediately. Any information that you provide to an auditor or examiner can, and is often, used to attempt to assess additional taxes, penalties, and interest. Do not ignore the problem. The failure to respond to an audit notice can lead to a summary assessment of substantial taxes, penalties, and interest followed by the seizure of income and assets including wages, bank accounts, automobiles, and real property.

We want to represent you to defend against the assessment of additional tax liability as the result of an audit and minimize your risk of criminal liability. The attorneys at the Law Offices of Stephen Moskowitz, LLP want to provide you with strategies to lawfully minimize potential civil and criminal liabilities.

* The results protrayed in the cases mentioned above were dependent on the facts of that particular case, and the results will differ if based on different facts.