Associate Tax Attorney, Brian S. Trinh, joins Wilson Tax Law Group, APLC

We recently issued a press release announcing Brian S. Trinh's addition to the firm. Since joining, he has already been actively supporting our clients, strengthening our practice, and making meaningful contributions to our team. We're pleased to officially share the news.

 

CA’s Proposed Billionaire Tax: Key Planning Risks

Once again, California is at the center of a national tax debate and we are tuning in to gain a better perspective on what this means for high-net worth individuals. A proposed ballot initiative, commonly referred to as the “2026 Billionaire Tax Act,” has sparked significant concern among high-net worth individuals, family offices, and closely held business owners. While the measure is not yet law, its potential impact is serious enough that proactive planning is no longer optional.

What is being proposed?

The initiative would impose a one-time tax on individuals and certain trusts with net-worth exceeding $1 billon, reportedly at a rate up to 5%. Unlike traditional income or capital gains taxes, this proposal targets wealth itself, including assets that may be difficult to value, such as business interests, real estate, or private investments.

Although marketed as a limited, one-time assessment, history shows that “temporary” taxes often become precedent for future expansion, in scope and frequency.

Why this matters before passage?

From a legal and planning standpoint, the mere existence of the proposal creates risk. High-net worth taxpayers should be aware of several immediate concerns. Several immediate concerns may include residency and domicile scrutiny over perceived tax avoidance, valuation disputes over privately held assets, trust structures and asset ownership may come under closer review, and retroactivity concerns could trigger constitutional challenges and litigation. We believe it is important to get ahead of these concerns as waiting for clarity could be an expensive strategy.

Suggested tips

While it might be too early to take drastic action based solely on a proposal, it is an ideal time to meet with your trusted tax attorney, not just your preparer, to review your asset structures and trust planning, evaluate residency risk and documentation, identify audit vulnerabilities tied to asset reporting, valuations, and prior filings, stress-test valuations of significant holdings, and coordinate tax planning with legal, estate, and wealth advisors. Unlike CPA’s, a trusted tax attorney can advise on legal risk, audit defense, constitutional issues, and privilege-protected planning. When dealing with proposed taxes that raise questions about valuation disputes, retroactivity, and enforcement authority, legal strategy matters as much as tax math.

Concluding Remarks

Proposed tax laws often change, stall, or fail. However, now is not the time to ignore them which could be a costly mistake. California’s proposed billionaire tax highlights a broader trend toward aggressive state-level taxation of wealth. High-net worth individuals should stay informed, proactive, and well-advised. If you are concerned with how this proposal could affect you and/or your business, please reach out today and setup a consultation to discuss different strategies on how to properly plan for protection under the guidance of one of the firm’s trusted tax attorneys.

If you have any questions regarding your individual or businesses’ state and/or federal tax return(s)/tax liabilities or received a notice from the IRS, FTB, EDD, CDTFA or any other regulatory agency, please call or email Wilson Tax Law Group, APLC, to setup a consultation with our firm.

Wilson Tax Law Group, APLC is a boutique Orange County tax controversy law firm that specializes in representation of individuals and businesses before federal and state tax authorities with audits, appeals, FBAR, offshore compliance, litigation and criminal defense.  Firm founder, Joseph P. Wilson, is a former Federal tax prosecutor and trial attorney for the IRS and California Franchise Tax Board.  Wilson Tax Law Group, APLC, is comprised of former IRS litigators & Special Agents, and Assistant US Attorneys from the US Attorney’s Office, Central District of California, Tax Division, which at the time handled both civil tax lawsuits and criminal tax prosecutions on behalf of the United States of America.

For further information, or to arrange a consultation please contact: Wilson Tax Law Group, APLC

Tel: (949) 397-2292 (Newport Beach Office) 

Tel: (714) 463-4430 (Yorba Linda Office)

Disclaimer: This blog post is for informational purposes only and does not constitute legal, tax or financial advice. Please consult with a qualified attorney, accountant or financial advisor for specific guidance related to your circumstances.

Risks Behind “My CPA Approved It”

One of the most common and most dangerous statements we have heard from California taxpayers who are being audited is: “My CPA said it was fine.”

While CPAs play a vital role in tax preparation and compliance, that statement does not provide legal protection when the Internal Revenue Service or the Franchise Tax Board challenge your filed tax returns.

Understanding the difference between tax preparation and tax defense can mean the difference between a manageable audit and a financially devasting outcome.

CPA Advise Does Not Equal Legal Protection

Auditors do not evaluate whether your CPA believed a position was reasonable. They evaluate whether the position complies with tax law. If it does not comply, liability rests with the taxpayer; not the tax preparer.

Many taxpayers are also surprised to learn that communications with a CPA are generally not protected by attorney-client privilege. In an audit or dispute, emails, notes, and explanations shared with a preparer may be requested and used as evidence against you.

“Good Faith Reliance” Does Not Stop Penalties

Another common misconception is that replying on a CPA automatically eliminates penalties. In reality, even when a CPA prepared a return, taxpayers may still face back taxes, interest, accuracy-related penalties, or negligence penalties. In California, these amounts can escalate quickly due to compounding interest and aggressive enforcement practices.

Audits Are Not About Preparation, They’re About Defense

Once an audit begins, the process becomes adversarial. Auditors are trained to identify unsupported deductions, residency and sourcing errors, misclassified income, or aggressive or inconsistent positions. At this stage, continuing without legal representation can expose taxpayers to unnecessary risk. How information is presented and how much is disclosed, matters.

Why a Tax Attorney Changes the Outcome

A trusted tax attorney’s role is not to re-prepare the tax return, but to defend it. This includes assessing legal exposure, controlling communication with taxing authorities, determining whether positions can be defended, negotiated, or mitigated, and preserving attorney-client privilege.

Bottom Line for California Taxpayers

CPAs are essential for compliance and planning. However, when an audit, notice, or dispute arises, CPA approval does not equate to legal protection.

The real question is not whether something was “fine” at the time; it is whether it can withstand scrutiny now. Early involvement of an experienced and trusted tax attorney can reduce penalties, limit exposure, and prevents small issues from becoming major financial liabilities.

Because in tax audits, what matters most is not who prepared the return, it is who knows how to defend it.

If you have any questions regarding your individual or businesses’ state and/or federal tax return(s)/tax liabilities or received a notice from the IRS, FTB, EDD, CDTFA or any other regulatory agency, please call or email Wilson Tax Law Group, APLC, to setup a consultation with our firm.

Wilson Tax Law Group, APLC is a boutique Orange County tax controversy law firm that specializes in representation of individuals and businesses before federal and state tax authorities with audits, appeals, FBAR, offshore compliance, litigation and criminal defense.  Firm founder, Joseph P. Wilson, is a former Federal tax prosecutor and trial attorney for the IRS and California Franchise Tax Board.  Wilson Tax Law Group, APLC, is comprised of former IRS litigators & Special Agents, and Assistant US Attorneys from the US Attorney’s Office, Central District of California, Tax Division, which at the time handled both civil tax lawsuits and criminal tax prosecutions on behalf of the United States of America.

For further information, or to arrange a consultation please contact: Wilson Tax Law Group, APLC

Tel: (949) 397-2292 (Newport Beach Office) 

Tel: (714) 463-4430 (Yorba Linda Office)

Disclaimer: This blog post is for informational purposes only and does not constitute legal, tax or financial advice. Please consult with a qualified attorney, accountant or financial advisor for specific guidance related to your circumstances.

AI Money. California Taxes. Big Stakes.

California’s economy is once again riding a powerful technology wave and this time fueled by artificial intelligence. From AI startups to publicly traded tech giants, innovation is accelerating, valuations are soaring and equity compensation is back in full force. As a result, California is experiencing a notable increase in personal income tax revenue tied to stock options, restricted stock units (RSUs), and capital events driven by the tech and AI sector.

According to recent analysis and state data, a meaningful portion of California’s income tax withholding now comes from technology-related compensation and this tends to be the case during favorable market conditions. While this surge is providing short-term market revenue stability for the state, it also introduces significant volatility which can translate into unexpected tax exposure if taxpayers are not properly planning for these fluctuations.

Why AI is Quietly Reshaping CA Taxes

AI is not just transforming how businesses operate; it is reshaping how income is earned and taxed. Many California employees and founders are compensated through complex equity structures rather than traditional wages. When AI companies grow quickly or go public, a single stock event may trigger large, one-time income recognition, state and federal tax misalignments, and California sourcing disputes for remote or relocating workers.

California’s tax system is highly sensitive to these events. The state relies heavily on high-income earners, which largely influence and impact market movement through revenue spikes (strong markets) and/or collections (market pull back). State agencies such as the California Department of Finance and California Franchise Tax Board, closely monitor this trend and individual taxpayers are often caught off guard by how quickly their tax landscape can change.

The Risks Without Tax Planning

AI-driven wealth is rarely simple. Equity compensation, multi-state residency issues, trust planning, and California’s frequent misalignment with Federal Laws, all create traps for the unwary. Many taxpayers assume their CPA or payroll withholding has everything covered and run into surprise tax bills, penalties and interest, residency audits, trust structures that don’t perform as expected under CA law. This is especially true for founders, executives, and high-net-worth individuals whose income can fluctuate dramatically year after year.

Why a Trusted California Tax Attorney Matters

This is where having a trusted tax attorney becomes critical. Unlike generic tax preparation, a trusted tax attorney evaluates the legal consequences of AI-driven income and helps clients proactively plan for proper structuring of equity, timing strategies around CA tax exposure, trust and estate planning that withstands CA scrutiny, and audit defense and controversy support if issues arise.

Concluding Remarks

The AI boom is real and creating extraordinary opportunities which are reshaping California’s tax landscape in ways that demand careful attention. As technology continues to drive wealth creation and tax uncertainty, working with a trusted tax attorney ensures you are not just reacting to the rules, but staying ahead of them. If your income, investments, or business are touched by AI, now is the time to make sure your tax strategy is built to keep up.

If you have any questions regarding your individual or businesses’ state and/or federal tax return(s)/tax liabilities or received a notice from the IRS, FTB, EDD, CDTFA or any other regulatory agency, please call or email Wilson Tax Law Group, APLC, to setup a consultation with our firm.

Wilson Tax Law Group, APLC is a boutique Orange County tax controversy law firm that specializes in representation of individuals and businesses before federal and state tax authorities with audits, appeals, FBAR, offshore compliance, litigation and criminal defense.  Firm founder, Joseph P. Wilson, is a former Federal tax prosecutor and trial attorney for the IRS and California Franchise Tax Board.  Wilson Tax Law Group, APLC, is comprised of former IRS litigators & Special Agents, and Assistant US Attorneys from the US Attorney’s Office, Central District of California, Tax Division, which at the time handled both civil tax lawsuits and criminal tax prosecutions on behalf of the United States of America.

For further information, or to arrange a consultation please contact: Wilson Tax Law Group, APLC

Tel: (949) 397-2292 (Newport Beach Office) 

Tel: (714) 463-4430 (Yorba Linda Office)

Disclaimer: This blog post is for informational purposes only and does not constitute legal, tax or financial advice. Please consult with a qualified attorney, accountant or financial advisor for specific guidance related to your circumstances.

Inherited Property in CA? Proposition 19 May Have Changed Everything

For many California families, real estate is more than an asset, it is a legacy. Homes and rental properties are often passed down with the expectation that children can retain them without significant tax consequences. Unfortunately, Proposition 19 (“Prop 19”) dramatically changes those assumptions, and many families are only discovering the impact after receiving a shocking property tax bill.

Prop 19, which took effect in February 2021, reshaped California’s property tax rules for inherited property. While it was promoted as a reform measure, its long-term effects continue to surprise heirs, trustees, and even longstanding estate plans that were created under prior law.

What Changed Under Proposition 19?

Before Prop 19, parents could transfer a primary residence, and often additional real estate, to their children without triggering a property tax assessment. This allowed families to keep property taxes based on historic assessed values, sometimes saving tens of thousands of dollars per year.

Under current law, that protection is mostly gone.

Today, only a parent’s primary residence may qualify for reassessment relief and even then, only if strict conditions are met. The child must use the inherited property as their own primary residence and must file timely claims with the county assessor. Even if those requirements are satisfied, there is a cap on how much assessed value can be excluded. Any value above that threshold is reassessed at current market rates.

Rental properties, vacation homes, and investment real estate no longer qualify for the parent-to-child exclusion. These properties are generally reassessed at full market value upon transfer, often resulting in immediate and substantial tax increases.

Why Families are Caught Off Guard

One of the most damaging aspects of Prop 19 is that it does not automatically apply exclusions. The burden is on the heir or trustee to take timely action and correctly. Some common mistakes include failing to file the required claim forms within the deadline, assuming a trust automatically preserves property tax benefits, believing prior estate plans still provide protection, or no understanding the residency requirement for inherited homes. Once reassessment occurs, reversing it can be extremely difficult or impossible without legal intervention.

Prop 19 is More than a Property Tax Issue

What many taxpayers do not realize is that Prop 19 often intersects with estate planning, income tax, and trust administration. A poorly structured transfer can create not only higher property taxes, but also capital gains exposure, trust distribution issues, and family disputes.

For example, siblings may disagree on whether one child should move into the inherited home to preserve partial tax benefits. Trustees may face liability for failing to advise beneficiaries properly. Heirs may be forced to sell property they intended to keep simply because the tax burden becomes unsustainable. These are not hypothetical scenarios; they are playing out across California every day.

Why working with a CA Tax Attorney Matters

Due to the technical nature of Prop 19, it can be unforgiving and confusing, without the support and guidance of a trusted tax attorney. It is heavily enforced at the county level as well. A tax attorney provides more than general advice and brings legal analysis, advocacy, and strategic planning to the table. A qualified California trusted tax attorney can evaluate whether an inherited property qualifies for any exclusions, ensure proper filings are completed accurately and on time, challenge incorrect or excessive reassessments, coordinate with estate planning professionals to reduce long-term exposure, and represent clients in disputes with county assessors. Perhaps, more importantly, a tax attorney helps families understand their options before irreversible decisions are made.

Education is the First Line of Protection

The biggest risk under Prop 19 is misinformation. Many families rely on outdated assumptions or informal advice, only to learn too late that the rules have changed. Education, planning, and proactive legal guidance can mean the difference between preserving a family asset and facing an unexpected and permanent tax burden.

If you are inheriting property, serving as a trustee, or planning your estate, now is the time to understand how Prop 19 truly applies to your situation. California property tax law is no longer simple and navigating it without experienced legal guidance can be a costly mistake.

If you have any questions regarding your individual or businesses’ state and/or federal tax return(s)/tax liabilities or received a notice from the IRS, FTB, EDD, CDTFA or any other regulatory agency, please call or email Wilson Tax Law Group, APLC, to setup a consultation with our firm.

Wilson Tax Law Group, APLC is a boutique Orange County tax controversy law firm that specializes in representation of individuals and businesses before federal and state tax authorities with audits, appeals, FBAR, offshore compliance, litigation and criminal defense.  Firm founder, Joseph P. Wilson, is a former Federal tax prosecutor and trial attorney for the IRS and California Franchise Tax Board.  Wilson Tax Law Group, APLC, is comprised of former IRS litigators & Special Agents, and Assistant US Attorneys from the US Attorney’s Office, Central District of California, Tax Division, which at the time handled both civil tax lawsuits and criminal tax prosecutions on behalf of the United States of America.

For further information, or to arrange a consultation please contact: Wilson Tax Law Group, APLC

Tel: (949) 397-2292 (Newport Beach Office) 

Tel: (714) 463-4430 (Yorba Linda Office)

Disclaimer: This blog post is for informational purposes only and does not constitute legal, tax or financial advice. Please consult with a qualified attorney, accountant or financial advisor for specific guidance related to your circumstances.

Your Federal Loss Strategy May Not Work in CA

Many California taxpayers assume that if a loss reduces their federal tax bill, it will automatically reduce their California tax as well. Unfortunately, that assumption can lead to unpleasant surprises. California does not always follow federal rules when it comes to net operating losses (NOLs), and right now the gap between federal and state treatment is especially significant.

At the federal level, net operating losses are generally allowed to be carried forward and used to offset future taxable income, subject to certain limitations. For businesses and individuals who experienced losses in recent years, federal NOLs remain an important planning tool.

California, however, plays by different rules.

For tax years beginning in 2024 through 2026, California has suspended the use of NOL deductions for many taxpayers. While losses may still be calculated and carried forward, some higher-income taxpayers and larger businesses cannot currently use those losses to reduce their California taxable income. In other words, you may receive a federal tax benefit from your losses while still owing substantial California tax.

There are limited exceptions. Taxpayers with net business income or modified adjusted gross income under $1 million may still be able to use California NOLs, and certain disaster-related losses are treated differently. We talk about this in our January and February 2025 blog posts.

For everyone else, the deduction is essentially paused. To offset this suspension, California has extended the carryforward period for affected losses. Unfortunately, this does not help with near-term cash flow or estimated tax planning.

This mismatch creates several real-world problems. Businesses relying on federal projections may underpay California estimated taxes. Startups and professional practices expecting losses to shelter state income may find themselves unexpectedly exposed. In mergers or business sales, California loss carryforwards are often overvalued if this suspension is not considered.

The key takeaway is simple: federal tax planning does not equal California tax planning. Loss strategies that make perfect sense at the federal level can fail at the state level if they are not carefully reviewed through a California lens.

If you are carrying forward losses, anticipating losses, or relying on federal projections to plan cash flow, now is the time to reassess. Proper planning may involve adjusting estimates, reviewing eligibility for exceptions, or re-timing income and deductions where possible.

At Wilson Tax Law Group, APLC, we regularly help California businesses and individuals navigate these state-specific pitfalls before they turn into costly surprises. If you’re assuming your federal loss strategy will protect you in California, it’s worth getting a second look and/or legal opinion from a trusted tax attorney before the Franchise Tax Board does.

If you have any questions regarding your individual or businesses’ state and/or federal tax return(s)/tax liabilities or received a notice from the IRS, FTB, EDD, CDTFA or any other regulatory agency, please call or email Wilson Tax Law Group, APLC, to setup a consultation with our firm.

Wilson Tax Law Group, APLC is a boutique Orange County tax controversy law firm that specializes in representation of individuals and businesses before federal and state tax authorities with audits, appeals, FBAR, offshore compliance, litigation and criminal defense.  Firm founder, Joseph P. Wilson, is a former Federal tax prosecutor and trial attorney for the IRS and California Franchise Tax Board.  Wilson Tax Law Group, APLC, is comprised of former IRS litigators & Special Agents, and Assistant US Attorneys from the US Attorney’s Office, Central District of California, Tax Division, which at the time handled both civil tax lawsuits and criminal tax prosecutions on behalf of the United States of America.

For further information, or to arrange a consultation please contact: Wilson Tax Law Group, APLC

Tel: (949) 397-2292 (Newport Beach Office) 

Tel: (714) 463-4430 (Yorba Linda Office)

Disclaimer: This blog post is for informational purposes only and does not constitute legal, tax or financial advice. Please consult with a qualified attorney, accountant or financial advisor for specific guidance related to your circumstances.

Essential IRS Changes Ahead for Partnerships

Partnerships, S corporations, and other passthrough entities are facing a new wave of Internal Revenue Service reporting changes, many of which are complex, technical, and still evolving. As we move into the 2026 tax filing season, one is clear: the IRS rules governing partnership reporting are becoming more intricate, and taxpayers will benefit from professional guidance more than ever.

This year, the American Institute of CPAs (“AICPA”) called on the IRS and Treasury to provide earlier notice, clearer instructions, and more time for partnerships and their advisors to implement new reporting requirements. The goal is simple and that is to reduce confusion while avoiding last-minute surprises that can lead to errors, penalties, or delays. While those recommendations are still being reviewed, they highlight what tax professionals, and their clients, are feeling every day, the reporting landscape shifting quickly.

For partnerships, this means preparing tax filings under new and upcoming rules that impact everything from K-1 disclosures to basis reporting, CAMT implications for corporate partners, and even potential changes to IRS Form 8308 reporting of partnership interest sales. These updates are not just technical, the affect how information flows between partners, how income is allocated, and how compliance risk is managed.

The IRS has released interim guidance to ease some burdens, such as simplified methods for calculating adjusted financial statement income under the CAMT framework. However, these temporary measures still require careful interpretation and planning. Many partnerships will face mixed elections, new documentation requirements, and expanded disclosure responsibilities.

And that is exactly where a trusted tax attorney can make the biggest difference.

At  Wilson Tax Law Group, APLC, we help partnerships understand what these IRS changes mean in practical terms, not just what the regulations say, but how they affect your filings, your partners, and your audit exposure. We stay ahead of IRS updates, advocate for your interests, and ensure that your reporting is accurate, defensible, and aligned with the most current guidance available.

As the IRS continues refining partnership reporting rules, having an experienced tax attorney on your side provides clarity, strategy, and peace of mind; especially when the stakes involve multi-partner allocations, complex transactions, or potential penalties.

If your partnership wants to get ahead of the 2026 filing season, now is the time to plan. We’re here to be your trusted partner and your strongest line of defense, every step of the way.

If you have any questions regarding your individual or businesses’ state and/or federal tax return(s)/tax liabilities or received a notice from the IRS, FTB, EDD, CDTFA or any other regulatory agency, please call or email Wilson Tax Law Group, APLC, to setup a consultation with our firm.

Wilson Tax Law Group, APLC is a boutique Orange County tax controversy law firm that specializes in representation of individuals and businesses before federal and state tax authorities with audits, appeals, FBAR, offshore compliance, litigation and criminal defense.  Firm founder, Joseph P. Wilson, is a former Federal tax prosecutor and trial attorney for the IRS and California Franchise Tax Board.  Wilson Tax Law Group, APLC, is comprised of former IRS litigators & Special Agents, and Assistant US Attorneys from the US Attorney’s Office, Central District of California, Tax Division, which at the time handled both civil tax lawsuits and criminal tax prosecutions on behalf of the United States of America.

For further information, or to arrange a consultation please contact: Wilson Tax Law Group, APLC

Tel: (949) 397-2292 (Newport Beach Office) 

Tel: (714) 463-4430 (Yorba Linda Office)

Disclaimer: This blog post is for informational purposes only and does not constitute legal, tax or financial advice. Please consult with a qualified attorney, accountant or financial advisor for specific guidance related to your circumstances.