Don’t Panic, But the IRS Just Sent You a 30-Day Deadline

If you or your company receives a 30-day letter from the Internal Revenue Service, it is highly recommended that you do not take it lightly. Take a breath – but do not take your time. This notice marks the official end of you or your company’s audit and the beginning of a very short window to act. In fact, the Internal Revenue Service outlines proposed changes to your tax return, concluding that you owe more than what was originally reported, in this letter. You or your company now have 30-days to respond – or risk losing your strongest opportunity to push back.

So, what exactly is on the line?

The 30-day letter gives you or your company the right to file a formal protest and have your case reviewed by the Internal Revenue Service’s Independent Office of Appeals. This is a critical chance to resolve your tax matter without going to court. Additionally, this is the time that you seek the trusted legal guidance of your local, licensed tax attorney, to help with understanding the proposed adjustments and outlining the procedures for submitting a protest. Appeals officers are separate from auditors, which often means a fresh, more flexible perspective on your case – if you respond in time.

If you or your company choose to ignore this 30-day letter, the Internal Revenue Service may issue a Notice of Deficiency, also known as a “90-day letter.” If this occurs, things could become more serious and the Internal Revenue Service can legally assess and collect the additional tax, penalties, and interest, and you or your company’s only option is to file a petition in U.S. Tax Court to dispute the assessment.

Here is the kicker: once you are in U.S. Tax Court, you are largely stuck with the facts and documents developed during the audit. The window to introduce new arguments or evidence narrows significantly. That is why the first 30-days are so important, seeking guidance from a trusted and licensed local tax attorney, will be your best opportunity to protect your position before it is finalized.

The bottom line?

If you or your company received a 30-day letter, time is not on your side. Acting quickly and strategically can make the difference between resolution and escalation. A thoughtful, well-prepared response could save you or your company a great deal of time, stress, and money. This well-prepared response should be carefully crafted, grounded in legal reasoning and supported by documentation. This is where having an experienced tax attorney, in you or your company’s corner, becomes your greatest asset. A tax attorney won’t just argue numbers – they understand the legal framework behind IRS procedures, know how to interpret technical findings, and can spot weaknesses in the IRS’s position that you could miss. They help ensure you are protecting you or your company’s rights at every stage.

Consult with Wilson Tax Law Group, APLC today, to better understand you or your company’s options, build your protest, and put you or your company in the strongest possible position moving forward.

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.

Don’t Take the Bait: Protect Your Taxpayer Information

The Internal Revenue Service and Security Summit Partners have been working to better understand the various phishing, spear phishing, clone phishing and whaling scams that are aimed at obtaining sensitive personal identifiable information. As you may well know, phishing and related scams can expose taxpayers to legal, financial, and identity risks that can have long-term consequences. This is not just an IT-issue, this is a serious legal and financial vulnerability that demands attention. As the financial landscape grows more complex, so do tax compliance and reporting obligations – placing even greater responsibility on taxpayers to safeguard their personal and financial data. Now more than ever, taxpayers must remain vigilant about how they communicate electronically and which platforms they use to share sensitive information with their financial advisor, CPA or local tax attorney.

Examples of such phishing, spear phishing, clone phishing and whaling scams can include smishing text messages or emails with suspicious links, emails that are targeted, realistic-looking and crafted to deceive recipient with a link, sending emails from known senders where the email address is very similar to one sent by a frequent sender with a link, emails that are targeting executives, HR, payroll/accounting heads or financial officers, and recently, emails sent from “potential new client” with attachments or links.

Taxpayers can use a combination of behavioral awareness and secure tools that include the use of encrypted portals for document sharing such as Dropbox, ShareFile, Citrix, NetClient CS, Liscio or your tax professional’s secure portal. Another option would be to use two-factor authentication (“2FA”) on all financial platforms such as online banking, tax software, and email. Use of password management software such as Keeper, LastPass, NordPass, etc. and use of strong passwords that are updated every 60-90 days can help with managing your credentials safely. Taxpayers can also create an online IRS account to monitor tax transcripts, refund status, and any suspicious activity to detect vulnerabilities sooner.

Ultimately, your best defense is using the verification method and looking at who sent the email, reviewing the sender’s email address, context of message, etc. If you receive an email that is a tax-related request which seems suspicious, you can forward the email to phishing@irs.gov and notify your financial advisor, CPA or local tax attorney immediately for security purposes.

We highly recommend protecting your digital footprint with the same caution you would your financial statements. Prevention now can save you or your business from serious legal and financial headaches later.

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.

 

 

Latest Federal Tax Overhaul: What CA Business Owners Need to Know

The One Big Beautiful Bill was recently signed into law by President Trump last week on Independence Day and many are curious as to what this entails for Americans. According to White House.gov, this newly enacted law is set to benefit middle and working class Americans who make less than $50,000 per year, making it one of the largest tax cuts in history. For context, this bill proposes approximately $4-4.5 trillion in tax reductions over the next decade, extending the 2017 Tax Cuts and Jobs Act (TCJA). Generous provisions to include elimination of taxes on tips, overtime, and social security. Moreover, increased child tax credits and standard deductions, aimed at positively impacting an estimated 40-million families, while providing relief to seniors, throughout the U.S.

There are also significant provisions, within this bill, that are designed to stimulate small business growth and will attempt to curve operational burdens for pass-throughs, tipped workers, and family-owed companies. Business owners may continue to deduct up to 20% of net income (Quality Business Income Deduction) under IRC § 199A as it relates to income thresholds and SSTB limitations. Under this new bill, businesses might also be eligible to fully deduct qualified capital expenses (equipment, vehicles, software) in the year where these items were first used by the business. In addition, businesses may find more flexibility to invest without complex depreciation schedules as the limit for expensing smaller equipment and software will increase significantly. For service industries, such as salons, restaurants and hospitality, employee tips will be tax free which will help to reduce employer payroll tax liability and simplify reporting requirements on the federal level. However, California may still treat employee tips as taxable income.

Keep in mind, tax law is constantly changing and evolving and this latest legislation is no exception. While the “One Big, Beautiful Bill” presents major opportunities for business owners, it also brings complexity, especially in California. We encourage you to dig deeper and ask the right questions, and consult with your trusted and licensed financial advisor, CPA, and tax attorney before making any strategic moves.

Our firm is closely monitoring developments at both the federal and state levels, and will continue to share insights as the details unfold.

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.

 

Microcaptives Unmasked: Several Hidden Hazards Mitigating the Minefield

Under a microcaptive insurance company, California businesses may seek this controllable risk management option to self-insure specific risks as it relates to supply chain interruptions, regulatory shutdowns, loss of key clientele, cyber incidents, etc. which company policies can be customized to fit actual exposures. Another benefit of owning a microcaptive insurance company is the stabilization of costs and cash flow control measures that keep premiums consistent. This reduces the added pressures of unexpected annual rate changes or increases which commonly are associated in working with third parties. There could also be opportunities for tax deferrals or reductions that could lower tax liability so businesses are only paying for the insurance coverage needed and are not battling volatile market conditions. In some instances, any assets held in a properly structured microcaptive may be shielded from creditors of the parent company.

While microcaptives offer significant advantages, they also come with important drawbacks to weigh carefully and merit close consideration. Some potential hazards to consider with microcaptives may include whether it makes sense for businesses to pull away from traditional commercial insurance in favor of flexible and diversified insurance. Without guidance from a licensed financial advisor, CPA and a local tax attorney, California businesses may run the risk of failing to meet Internal Revenue Code §831(b) requirements if unable to demonstrate business purpose beyond tax benefits and cannot prove such business is functioning like a real insurance company (issuing bona fide policies, charging actual premiums, managing claims and distributing risk exposure). Additionally, there are setup fees, actuarial fees, legal fees, and ongoing management costs plus a substantial financial commitment, often into high six figures, to adequately fund a microcaptive insurance company.

Under Internal Revenue Code §831(b), eligible microcaptives may elect to exclude premium income from taxable income at the captive level and deduct insurance premiums as a business expense at the business operating level if premiums are below an annual threshold of approximately $2.85 million for 2025. Microcaptive insurance regulations change frequently and for this reason, California businesses should consider advisement from a licensed tax attorney who will have the legal expertise to assist with understanding the unpredictable and closely scrutinized tax climate for purposes of staying compliant. Despite their appeal, microcaptives present significant risks and obligations that cannot be ignored.

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.