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.

AI-Powered IRS: Why Now is the Time to Have a Human Tax Attorney in Your Corner

The Internal Revenue Service (“IRS”) is moving aggressively into the next phase of its modernization strategy – and the shift is more significant than many taxpayers realize. Recent announcements confirm that the agency is rolling out Salesforce-powered AI agents to handle taxpayer interactions, streamline case processing, and triage compliance issues long before a human analyst ever sees the file. At the same time, independent workforce reports show continued reductions in IRS staffing, particularly among experienced revenue agents, appeals officers, and collections personnel.

While the IRS has publicly stated that these changes are designed to “improve efficiency,” “increase efficiency,” and “enhance taxpayer service,” the practical entity is far more complex. For many individuals and businesses, this new system may feel less like modernization and more like enforcement by algorithm and it’s crucial to understand what that means.

Automation and Fewer Experienced IRS Employees = A New Enforcement Landscape

In recent years, the IRS has struggled to rebuild its workforce. Retirements, hiring delays, and a shortage of experienced specialists have created gaps in examination and appeals. Rather than slow enforcement actions, the IRS is turning to AI systems, powered through Salesforce, to help identify discrepancies, flag potential audit triggers, route cases, and generate notices automatically.

For taxpayers, this means: less human discretion, more notices generated faster, fewer opportunities for informal resolution and greater chance of errors. With reduced human interaction, there is less likelihood for judgment or context which trained IRS employees bring to the table as well as reasonable cause and industry-specific nuances. With more notices, this means less time for any human review of taxpayer data and increased room for error; as notices could be relying on incomplete data, timing miscalculations, or outdated information.

At Wilson Tax Law Group, APLC, we are already seeing the consequences. Clients are receiving inquiry letters triggered by algorithmic filters, not by IRS agents reviewing files. Some notices are issued before taxpayers have time to update their filings or respond to prior correspondence. And in many cases, taxpayers are pushed into automated cycles that escalate penalties or collections without meaningful human oversight.

Why Working with a Trusted Tax Attorney is More Essential than Ever

As the IRS becomes more automated, your defense must remain human, experiences, and strategic. Technology can accelerate enforcement, but it cannot interpret your unique circumstances, your supporting documents, or your legal arguments the way a seasoned tax attorney does. An experienced tax attorney can intervene early, communicate with real IRS personnel, identify procedural errors, prepare nuanced legal arguments, and navigate escalations to IRS appeals or Tax Court. More importantly, a tax attorney serves as a buffer between you and the IRS, ensuring that your rights are protected in a system that is becoming more impersonal and mechanized.

The IRS May Be Turning to AI – But Your Tax Advocate Should be Human

Automation is here to stay. The IRS will continue investing in AI tools to manage workloads, reduce staffing pressure, and increase revenue collection. But this does not mean taxpayers must navigate this new environment, alone.

If you receive a letter generated by an IRS AI system or if you suspect you have been flagged by automated review, do not wait. Early intervention can prevent months of unnecessary stress, penalties, and escalating enforcement. While the IRS relies on automated agents, Wilson Tax Law Group, APLC relies on trusted human judgment, careful analysis, and personalized advocacy to protect your financial future. Give us a call, we are happy to guide you 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.

 

 

 

CA Residency Audits are Surging: FTB Targets Remote Workers Who Claim They “Moved”

California’s Franchise Tax Board (“FTB”) has quietly increased its enforcement on residency audits, and the trend is hitting a growing number of taxpayers who believe they successfully “moved out of California.” With remote work on the rise, more individuals are claiming residency in Nevada, Texas, Arizona, Idaho, and Florida, yet still maintain meaningful ties to California. The FTB is using new data-matching tools to challenge these filings and taxpayers are being caught off guard.

At Wilson Tax Law Group, APLC, we are seeing a pattern emerge: taxpayers who genuinely believed they left California are now receiving residency audit letters questioning where they actually live, earn income, and maintain their economic interests.

Why California is Targeting “Ex-Californians”

California has one of the highest state income tax rates in the nation, and departures from the state are at record highs. The FTB is now reviewing returns for signs that a taxpayer is claiming out-of-state residency while still owning property here, works remotely for a California employer, maintains a CA LLC or S-Corp, uses a California mailing address, and frequently travels to California for work or family needs.

The FTB analyzes credit card activity, cellphone records, online banking logins, EZ-Pass and flight data, all to build a timeline of where you actually spend time. Even short or frequent trips to California can lead the state to classify you as a statutory or domiciliary resident. Read more about part-time resident and nonresident status on the FTB’s website.

Common Red Flags

Based on our case experience, the FTB is aggressively scrutinizing those taxpayers who retain a California home (even if smaller than their main home), children or spouse remaining in California, using California doctors, accountants or business vendors, California based vehicle registration or insurance, and continuing to manage a California business entity. Taxpayers are surprised by how simple actions such as, keeping a California gym membership, could be used to argue continuing residency.

How we can help

Residency audits are highly fact-specific. At Wilson Tax Law Group, APLC, we can assist taxpayers by preparing evidence packages that demonstrate true domicile change, defend against improper FTB conclusions, negotiate audit scope and limit document requests, and handle appeals and resolve complex multi-state tax exposure. For taxpayers planning a move or currently under FTB examination, getting ahead of the issue is critical. Our firm helps clients structure their affairs correctly and defend their rights if challenged.

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.

CDTFA Rate Changes & Compliance Alerts

As the government returns to full operational status, California businesses are once again squarely on the radar of the California Department of Tax and Fee Administration (CDTFA). With new sales-and-use tax rate changes taking effect, heightened enforcement activity, and several compliance updates quietly released through CDTFA bulletins, now is the time for businesses to get ahead of the changes rather than react to them during an audit. See our firm’s August 6, 2025 blog post on what to do if CDTFA issues an audit and sends a notice.

Whether you are a retailer, e-commerce seller, contractor, professional services provider, or out of state business delivering goods into California, these updates may impact your tax obligations for the remainder of 2025 and into 2026.

CDTFA issued multiple Tax Information Bulletins announcing new district sales-and-use tax rates taking effect July 1, 2025 and again on October 1, 2025. Because California allows cities, counties, and special districts to add their own taxes, the total rate in some jurisdictions is changing.

Now that normal government operations have resumed, CDTFA is signaling a renewed focus on audits, nexus enforcement, and sales-tax compliance reviews. Recent CDTFA announcements also show increased auditor hiring and expanded enforcement resources, two clear indicators that more businesses might be contacted in the coming months.

Who is most at risk

Cash-heavy businesses, e-commerce retailers, out-of-state businesses shipping into California, construction contractors, businesses reporting exempt sales, and entities with inconsistent district taxes on returns. Minor errors, such as using outdated district rates, can be treated as negligence, resulting in penalties, interest, and back-tax assessments.

Why this matters for your business

Even a small rate change can trigger under-collection or over-collection of sales tax. Refer to the CDTFA’s Publication on Collection Procedures for more information. Businesses are responsible for charging the correct district rate based on the location of the sale or delivery, not just the state base rate. Out of state businesses with California customers (including online retailers) must also update their tax-collection systems to avoid CDTFA penalties.

Next steps

Be sure to update your POS systems, accounting software, and invoice templates before the effective dates, if not already. Verify rates based on customer delivery address, not billing address, as these might differ. For businesses with multiple locations, confirm each location’s correct district tax rate.

What businesses can do to plan for 2026

With multiple rate changes, rising enforcement levels, and expanded nexus obligations, businesses operating in California need to be more proactive than ever. The CDTFA has made it clear: errors in tax rate application and recordkeeping will be penalized, whether or not they were intentional.

Now is the ideal time to conduct a sales tax health check or internal audit, review nexus exposure (especially for e-commerce and multi-state businesses, correct outdated systems, and ensure staff are trained on the new rules and sourcing requirements.

At Wilson Tax Law Group, APLC, we help businesses with sales and use tax audits, CDTFA appeals, nexus analysis and multi-state exposure, tax-rate reviews and compliance planning, voluntary disclosure programs, and more. If you’re unsure whether your business is prepared for California’s new tax environment, we can help you review your systems, reduce risk, and avoids costly penalties before CDTFA comes calling.

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.

How SB 711 Impacts Your California Taxes

When it comes to California taxes, “conformity” to the federal Internal Revenue Code (IRC) does not always mean alignment. This can create big surprises for taxpayers. With the passage of Senate Bill 711, California has officially updated its conformity date to January 1, 2025. This means the state will now recognize most federal tax provisions that were in effect as of that date but not all of them.

At Wilson Tax Law Group, APLC, we are closely monitoring these changes because the gap between state and federal law is one of the most common causes of confusion, compliance errors, and unexpected tax bills for our clients.

What’s Changing

Previously, California’s conformity date lagged years behind federal law, meaning many federal updates never flowed through to California tax returns. Senate Bill 711 moves that benchmark forward, aligning California with a much more current version of the IRC. This is good news for California taxpayers, particularly those who claimed recent federal deductions or credits that were disallowed at the state level.

However, full conformity does not occur automatically. California is considered a “fixed-date” conformity state and generally has decoupled from many significant federal tax provisions enacted after its specified conformity date (this was recently updated to January 1, 2025 for tax years beginning on or after January 1, 2025). Some of those provisions include bonus depreciation and Section 179 expensing limits, qualified business income (QBI) deductions under IRC § 199A, certain opportunity-zone and clean energy provisions, etc.

Suggested year-end preparations

Review your 2024 and 2025 filing side-by-side. Make sure any carryovers, depreciation schedules, or credit calculations align with California’s updated rules.

Confirm withholdings and estimated payments. If your federal taxable income changes under the new conformity date, your state liability may shift too.

Evaluate business and investment structures. The new conformity date could affect pass-through entities, deferred compensation, and opportunity-zone timing decisions.

Why a Tax Attorney Can Help

California’s partial conformity system often leads to complex reconciliations and audit exposure. A seasoned tax attorney can interpret which provisions truly apply to your situation, amend prior returns if needed, and communicate directly with the Franchise Tax Board or IRS if questions arise. At Wilson Tax Law Group, APLC, we help individuals, professionals, and business owners navigate these nuanced updates, so your year-end planning is proactive, not reactive. Do not let new rules catch you off guard. Turn tax uncertainty into opportunity with trusted legal insight.

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.

Coverage, Credits, and Chaos: How Policy Shifts Could Raise your 2025 Tax Bill

As the 2025 open enrollment period beings, California residents are facing an important financial question that extends far beyond health insurance – what happens if federal premium tax credits expire?

At Wilson Tax Law Group, APLC, we are closely monitoring this issue because it carries significant implications for tax planning, cash flow management, and compliance for both individuals and business owners across the state.

The premium tax credit, originally expanded under the American Rescue Plan and later extended by the Inflation Reduction Act, has helped approximately more than 1.7 million Californians with seeking access to health coverage through the Covered California marketplace. These credits effectively reduce monthly premiums by applying an advance payment of a federal tax credit.

However, unless Congress acts to renew these provisions, those credits could expire soon, meaning that many Californians could see their premiums nearly double in the coming year. While this change originates in health policy, it directly affects taxpayers adjusted gross income (AGI), itemized deductions, and estimated payments. These are key components of taxpayers’ overall tax strategy.

From a legal and planning standpoint, this is a reminder that tax law and public policy are deeply interconnected. The loss of these credits would not only make coverage less affordable but also complicate tax reporting and reconciliation. This could place a huge financial burden on those taxpayers who received advanced premium payments in prior tax years.

Under the guidance of a trusted tax attorney, we recommend the following action items:

• Reviewing your 2025 income projections and determine if any adjustments to withholding or estimated payments are required.


• Schedule time with your tax attorney and advisor early to evaluate adjusted gross income changes and deductions.


• Stay updated on both IRS (Federal) and Covered California (State) guidance and announcements, as policy developments could unfold quickly.

At Wilson Tax Law Group, APLC, we help clients anticipate and adapt to these kinds of changes so you can make proactive decisions before they affect your bottom line. For assistance navigating the tax implications of health insurance changes, please contact our office to schedule a consultation with our firm. We cannot stop Congress from debating your health credits, but we can make sure your tax plan does not get burned in the process. When it comes to taxes, there is no such thing as a “we’ll see what happens” strategy.

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.

IRS Digital Footprint Enforcement – Use of Digital Evidence in Audits

Most people are not aware of the Internal Revenue Service’s tax enforcement initiatives as they relate to audits or that they even exist per the IRS’s Examination of Returns and Income guidelines with their internal manual. These tax enforcement initiatives are setup for purposes of gathering evidence and building tax cases based on . When people think of IRS audits, they initially think of bank statements and tax returns. However, in today’s AI-driven enforcement era, the IRS is actively using social media posts, luxury purchases, and even lifestyle indicators to detect tax fraud and Californian residents are prime targets.

California, commonly home to many popular influencers, entrepreneurs, real estate investors, entertainment professionals, and high-net-worth individuals, is often considered to be a high-discrepancy state, where lifestyle often exceeds what is being reported on tax returns. And, IRS is watching.

What is IRS Tracking through Social Media

IRS tax enforcement enlists investigators to review social media posts which showcase high-end travel, cars, private jets, designer goods, and events. Other online traceable items may include review of real estate records from California counties which can be cross-referenced against reportable income, review of cryptocurrency wallet activity connected to digital assets used for luxury purchases, and review of any unreportable income from Airbnb, Etsy, Poshmark, YouTube, or OnlyFans platforms.

Why Californians Face Extra Scrutiny

California is reported to have the highest number of cash economy businesses under audit by the IRS. Generally, IRS can collaborate with other regulatory agencies such as the Franchise Tax Board (“FTB”), California Department of Tax and Fee Administration (“CDTFA”), and Employment Development Department (“EDD”), for example, to create joint programs that allow real-time data sharing of taxpayer information amongst them all. Additionally, IRS now uses AI enforcement tools that can automatically flag lifestyle mismatches. All of this to say, that what you post online could be problematic based on whether income, business loss, or capital gains were properly and timely reported for that tax year.

Why this Matters

A common misconception by taxpayers is that they assume audits are triggered only by numbers on a tax return. However, this is not always the case. The IRS is increasingly building tax fraud cases from outside the tax return and turning to your digital footprint to build a narrative that negatively impacts your tax position.

What Californians Should Do Now

Remember to be socially aware of and cautious about posting luxury purchases if your reported income may not align. It is critical to track all digital revenue streams whether that is derived from influencer income, Venmo or Cash app payments, or crypto trades. Out of an abundance of caution, seeking advice from a local trust tax attorney is another opportunity to increase your line of defense should you receive a lifestyle audit letter. It is recommended that you do not respond on your own.

Final Thoughts

In this new era of AI enforcement, your lifestyle tells a tax story and you should be the writer of that financial, autobiographical story. Your tax story tells more than what you earned. It reflects how you live, how you invest, how you structure your assets, and how prepared you are for scrutiny. California residents, particularly those in business, real estate, or digital income streams, face a higher likelihood of lifestyle audits. If your Instagram story says, “Beverly Hills,” but your tax return says, “below the poverty line,” you can expect to receive a letter from the IRS. The smartest taxpayers do not wait for an audit to define their story, they work with a qualified tax attorney to write it first, with clarity, accuracy, and intention, while preserving their taxpayer rights.

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.

2026 Federal Inflation Changes Could Impact Your Tax Bill

The Internal Revenue Service (“IRS”) has announced the inflation adjustments for tax year 2026, and these changes are significant. These updates affect everything from the standard deduction and tax brackets to retirement contribution limits and credit thresholds. While the adjustments are designed to reflect the rising cost of living, they also introduce important planning opportunities and potential drawbacks for taxpayers and business owners.

At Wilson Tax Law Group, APLC, we understand how small changes in the numbers can have a big consequence for your overall tax strategy. Let us break down the highlights and what they might mean for you.

Key highlights of the IRS inflation adjustments include higher standard deductions for Married filing jointly ($32,200), Head of Household ($24,150), and Single/Married filing Separately ($16,100). These adjustments translate to fewer taxpayers having to itemize deductions but California may continue to make the decision to itemize complex; as it does not always align with Federal rules. It is recommended to have a strategic planner to help ensure you are not missing potential deductions at either level.

Another important highlight is the upward shift of income tax brackets which may be good news for most taxpayers. However, it is highly recommended to maintain tax planning efforts under the guidance of a trusted tax attorney, to closely monitor the timing of income and deductions. This is especially helpful in circumstances where there is variable income that needs to be reported. A third highlight, which we posted about previously, are the raised limits for retirement contributions (Sept. 18, 2025 blog post), health savings accounts (HSAs), and earned income credits. For anyone who is nearing retirement or managing multiple sources of income, these adjustments may provide opportunities to reduce taxable income while strengthening long-term financial plans.

Why You Need a Tax Attorney

Tax software cannot analyze strategy. Though your accountant can prepare your return, a tax attorney can protect, plan, and advocate for your long-term interests. A trusted tax attorney can translate Federal and California tax law interactions, identify opportunities to minimize liability across both systems, represent you before the IRS or FTB if issues arise, and help you structure your business, trusts or estates to adapt to new thresholds and preserve wealth. The 2026 inflation adjustments are more than just numbers; they are signals for change. Having an experienced advocate ensures that those changes work for you, not against you.

Final Thoughts

The IRS’s 2026 inflation adjustments highlight one truth: tax planning is never static. The rules evolve, your income shifts, and opportunities open and close every year.

Before filing season arrives, take time to review your tax position, discuss your goals, and craft a proactive plan with a trusted tax attorney.

At Wilson Tax Law Group, APLC, we help individuals and businesses across California navigate these changes with precision, confidence, and compliance. Schedule a consultation today to see how these new inflation adjustments may impact your tax strategy and how we can help you stay ahead of what’s next.

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.

When IRS goes Quiet: What Furloughs Mean for Taxpayers & Practitioners

The Internal Revenue Service recently announced plans to furlough nearly half of its workforce amid the current federal funding lapse and government shutdown. While this may sound like another bureaucratic hiccup in Washington, these furloughs could have real and immediate consequences for taxpayers, businesses, and professionals navigating already complex tax obligations.

What’s going on

Due to stalled federal budget negotiations, the IRS is preparing to suspend operations for thousands of employees, potentially impacting key functions such as processing mailed returns and correspondence, issuing refund checks or manual adjustments, responding to taxpayer inquiries or practitioner calls, scheduling and conducting audits or appeals, and/or handling collection actions and installment agreements. In essence, the IRS is entering a limited operations phase which means essential services like electronic payments and automated systems will continue, but human-handled matters may slow dramatically or stop altogether.

What this means for taxpayers

For individuals and businesses, the immediate impact depends on where you are in the tax cycle. If you’re waiting for a refund, expect longer delays with electronic refunds still moving but paper checks or manual reviews sitting in queue until a staff member returns. If you’re under audit or review, most audits, appeals, and case reviews will pause. However, this is temporary and taxpayers should continue locating essential documentation and may relieve the pressure for a short-period of time. If you owe taxes or are on a payment plan, collection may slow but interest and penalties will continue to accrue. If you’re facing enforcement or levy action, some automated notices may continue and system-related levies can still be issued. It is important to have updated contact information while closely monitoring your bank accounts.

Why IRS workforce changes matter

The IRS has been making real progress after years of backlog and underfunding which make the current furloughs detrimental in terms of minimizing such progress as it relates to: 2024 tax returns currently being corrected for credits and amended filings, reducing the effectiveness of the “Zero Paper Initiative” and making physical mailrooms critical, and continuing to reduce the size of the IRS workforce which has been decreased by approximately 20% since the pandemic.

This could cause major challenges for the 2026 tax year in regards to the processing of refunds, appeals, and even resolution of taxpayer disputes could be delayed for months.

Action Plan

We believe the best course of action for taxpayers is to stay proactive by keeping your filings, estimated payments, and documentation up to date. Your obligations are not paused while IRS action might be delayed. Be sure to document every communication attempt which includes mailings, faxed correspondence, and proof of submission. Don’t stop resolving issues. Attorneys and tax professionals can still work toward voluntary resolutions, prepare offers, or negotiate with automated systems. This downtime is an opportunity to get your case file in perfect shape. Call your trusted tax attorney to protect your financial future today. Lastly, be careful in relying on misinformation regarding waived penalties or tax holidays. The law doesn’t stop because the telephones do.

Final Thoughts

The IRS furloughs highlight the fragility of our tax infrastructure and pose as a reminder that IRS sits at the center of U.S. fiscal health. The IRS is constantly subject to political turmoil which further support the need for all taxpayers to build resilience into your tax strategy by staying digital wherever possible, keeping clean and accessible records, and planning for response delays when timing is essential.

If your tax matter is time-sensitive or if you’re uncertain how the furloughs might affect your case, we highly recommend not to wait until the IRS reopens. Seek guidance now and develop a proactive plan which may make the difference between a delayed response and a missed opportunity. We are here to help and invite you to call our firm today!

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.

Hidden Costs of Leaving CA – Residency Audits & Tax Traps

For many individuals, the idea of leaving California comes with the promise of lower taxes, reduced cost of living, and a fresh start. States like Nevada, Texas, and Florida – with no personal income tax – often are at the top of peoples’ lists for relocation. However, before you start packing, it is essential to understand that the California Franchise Tax Board (“FTB”) closely monitors residency changes. Failing to plan properly can expose you to costly audits, unexpected tax bills, and potential tax penalties.

Why Residency Matters

California tends to tax residents on their worldwide income, while nonresidents are taxed only on income sourced to California. The line between “resident” and “nonresident” is blurred and often confusing in practice. By obtaining a driver’s license or signing a lease in another state, is not enough and could prove to be problematic. FTB looks at the totality of your life such as where your family lives, where you own property, where your business is located, and where you keep your valuables.

Common Traps in Residency Audits

If you maintain a residence in California, even if you claim another state as “home,” the FTB may argue that you remain a resident. If you are operating a business or earning significant income from California sources, this could trigger ongoing tax implications. If you have memberships, doctors, financial accounts, and social media activity showing continued presence or ties to California, you could be considered a resident. If you relocate mid-year without careful planning, you could create a split-residency situation which could increase tax filing complexity.

Why Legal Guidance is Critical

Every move is unique, and the consequences of missteps can be significant. Proper planning – ideally before moving out of California – can make the difference between a smooth transition and years of litigation or document production with FTB. At Wilson Tax Law Group, APLC, we help clients to structure their move in compliance with FTB standards, prepare documentation that supports nonresidence, and defend against aggressive residency audits.

Final Thoughts

Relocating out of California may reduce your tax burden, but only if done strategically. The FTB has the resources and authority to challenge your move, and the hidden costs of being unprepared are often higher than staying put. If you are considering leaving California, consult with a qualified tax attorney to protect your financial future.

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.

 

IRS Finalizes Catch-Up Contribution Rules: What Retirement Savers Need to Know

The IRS recently issued final guidance on regulations implementing one of the most anticipated elements of the SECURE 2.0 Act: catch-up contributions. While marketed as a way to boost retirement savings, these rules come with detailed compliance requirements that employees, employers, and plan administrators must carefully navigate.

What Changed

Catch-up contributions allow workers age 50 and older to make additional contributions to their 401(k), 403(b), or similar retirement accounts beyond the standard annual limit. Under SECURE 2.0, higher-income earners – those making more than $145,000 (don’t forget to consider inflation), are now required to make their catch-up contributions on a Roth (after-tax) basis rather then pre-tax basis.

The IRS final regulations clarify how this rule applies beginning in the 2026 plan year, providing a brief window for employers to update payroll and plan systems. In addition, the regulations outline how plan sponsors must track participant wages, designate contributions correctly, and handle administrative errors.

Why this matters to Employees

For employees approaching retirement, catch-up contributions can significantly increase savings. But the new Roth-only requirement for higher earners changes the tax picture: instead of receiving an immediate deduction, contributions are taxed up front but can grow tax-free. Whether this shift is beneficial depends heavily on an individual’s broader tax situation, projected income in retirement, and estate planning goals.

Why this matters to Employers

Employers sponsoring retirement plans now face heightened compliance duties. They must determine which employees are subject to the Roth requirement each plan year, update plan documents and payroll systems to properly handle Roth designations, and provide clear communications to participants so they understand their options. This could be problematic if misclassification or administrative missteps occur as this may result in qualification issues or IRS penalties.

The Value of Legal Guidance

While these regulations provide clarity, they also add complexity. Employers and high-income employees alike should consider seeking advice from a trusted tax attorney to analyze tax implications of Roth versus pre-tax savings strategies, ensure plan amendments and payroll processes meet IRS requirements, and avoid inadvertent compliance failures that could trigger audits or penalties.

Final Thoughts

SECURE 2.0’s catch-up contribution rules are designed to encourage stronger retirement enthusiasm, but the fine print makes careful planning essential. With the IRS final regulations in place, both employers and employees should take proactive steps to align their strategies with the new framework. Consulting a trusted tax attorney can provide peace of mind that your retirement savings and compliance obligations are being managed correctly and effectively.

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.

California’s Cap-and-Trade: Balancing the Budget and Climate Goals

California’s cap-and-trade program, first launched in 2013, is once again in the spotlight. Lawmakers and Governor Newsom recently reached an agreement to extend the program through 2045, ensuring it will remain one of the state’s key tools for cutting greenhouse gas emissions. But beyond its environment impact, cap-and-trade plays an increasingly important role in the state’s revenue stream and in managing California’s persistent budget deficit. This move underscores both the state’s climate leadership and reliance on this program as a revenue stream with broad financial, operational, and legal implications.

Why does this matter?

This matters because California is facing a budget gap of approximately $25 billon. While cap-and-trade revenue is not a silver bullet, it is a consistent funding stream to soften the blow of shortfalls. It allows lawmakers to avoid deeper cuts to core services while still investing in climate resilience. For legislators, it is both a climate tool and budget stabilizer. This means Californians may feel the policy’s effects in higher utility bills, fuel prices, or product costs, even as the state balances its books.

Extending the cap-and-trade program through 2045 signals California’s long-term commitment to tackling climate change while maintaining a unique funding mechanism that supports both climate initiatives and budget stability. The program’s dual role highlights the constant balancing act of state policy, using financial tools to push industries toward a cleaner future, while ensuring the state can meet its fiscal obligations.

What Businesses Need to Watch

For businesses operating in California, compliance costs and reporting requirements tied to the cap-and-trade program are only becoming more complex. Businesses with multi-state or multi-national operations face apportionment challenges, potential overlaps with federal rules, and evolving disclosure obligations. Any missteps could be costly – not only in penalties but in interest and lost opportunities for use of available tax credits or deductions.

While the cap-and-trade program is often positioned as environmental policy, at its core it functions much like a tax. It affects revenue forecasting, expense planning, and ultimately, the bottom line. For businesses and even high-net-worth individuals with investments tied to regulated industries, the new extension raises important questions: How will compliance costs be treated for tax purposes? Can certain expenditures qualify for credits? What strategies are available to mitigate exposure?

These questions are not meant to be handled by most taxpayers without consulting with a trusted tax attorney. Seeking legal advice from a tax attorney will help with navigating the intersection of climate policy and tax law, ensuring compliance along the way. It’s also a chance to identify opportunities in reducing risk and managing costs.

Final thoughts

As the debate over deficits and climate policy continues, one thing seems to be clear which is that the cap-and-trade program is not just focused on emissions. It is also focused on how California funds it future.

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.

 

R&D Credits Rewired: 2025’s Big Tax Changes and Opportunities

The tax landscape for businesses investing in domestic innovation has shifted dramatically in 2025. These changes present both opportunities and compliance challenges – here’s a breakdown of key updates.

Restoration of Immediate R&D Expense Deductions

Under the new One Big Beautiful Bill Act, domestic research and experimentation (R&E) expenditures can once again, be fully deductible in the year incurred, thanks to the enactment of Section 174A. This reverses the post-TCJA requirement (effective 2022) that domestic R&D costs can be capitalized and amortized over five years – a change that increased the after-tax cost of innovation.

Foreign R&D costs, however, still must be amortized over a 15-year period, keeping the statutory preference focused on stimulating domestic R&D.

Retroactive Relief for Small Businesses & Election Flexibility

Small businesses (generally those with average gross receipts of $31 million or less for 2022-2024) can elect to apply the new full deduction treatment retroactively to tax years beginning January 1, 2022. This means that many innovative startups and smaller businesses can amend past returns to capture refund opportunities or better match deductions with income.

Larger businesses can take unamortized domestic R&D deductions from 2022-2024 all at once in 2025, or may decide to split between 2025 and 2026. It doesn’t appear that there’s a need for a formal accounting method change via Form 3115, as the election is treated as an automatic, simplifying implementation.

Stricter IRS Documentation & Reporting Requirements

For compliance reasons, it’s important to read documentation published by the IRS, including how they continue to tighten reporting requirements for the R&D credits. Businesses with over $1.5 million in qualified research expenses (QREs) must now provide project-level details broken down by components – such as each product, process, software development, or technique with associated R&D costs.

Taxpayers must also clearly articulate the technological “information sought to be discovered” and describe their expense allocation methodologies. The bottom line is that IRS scrutiny is increasing, and weak documentation with the advisement or guidance of a trusted tax attorney, can jeopardize credit claims or trigger audit adjustments.

Planning Ahead & Caution Flags

Taken together, these significant changes can create a powerful incentive environment for innovation. Businesses can accelerate deductions, improve cash flows, and even revisit past tax years for refunds.

However, success under the new regime depends on proactive tracking, timely elections, and robust documentation. Businesses should evaluate whether to amend returns, revise internal R&D accounting systems, and tighten project-level expense tracking. Partnering with a trusted tax attorney, who has a team that understands both legislative and IRS expectations, is not optional but essential to maximizing your tax credits.

Innovation is back in the fast lane – but do not drive without your seatbelt.

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.

 

The Expensive Mistake CA Employers Can't Afford

If you’re an employer located in and/or employ a team of Californian employees, paying taxes on time isn’t optional – it’s a legal obligation. Falling behind with the IRS or California’s Employment Development Department (EDD) can have serious financial and personal consequences. Below, we break down what employers need to know about some of the risks of late payroll tax payments and what steps to take if you find you or your company behind.

Federal Consequences (IRS)

The IRS takes payroll taxes very seriously because employers are collecting money on behalf of employees. If not, the employer can face failure to deposit penalties (2%-15% of unpaid tax and based on how late the payment(s) are), failure to pay penalty (0.5% per month, up to 24% of unpaid balance), interest (unpaid taxes and penalties until paid in full), trust fund recovery penalty (most dangerous and could leave owners, executives or payroll managers personally liable for 100% of the FICA portion), and even criminal exposure (if found to be willful evasion).

California Consequences (EDD)

The EDD enforces California’s employment tax laws and has its own set of penalties separate from federal laws which include late payment penalties (15% of unpaid tax), late filing penalties (additional 10% if returns are not filed timely), interest (charged until balance is paid in full), personal liability (EDD holds those responsible for handling payroll taxes personally liable for unpaid withholding taxes), and aggressive collections (EDD can file liens, issue levies, and garnish wages for unpaid balances owed).

Business Risks

Failure to pay employment taxes brings government penalties and can also harm your business by damaging credit and reputation as liens are public, loss of good standing with tax authorities and triggering federal and state audits, loss of potential professional licensing, certifications, and financing, and may increase scrutiny on future filings and payroll practices.

Final Thoughts

If you’ve missed employment tax payments, consider the following: Act quickly, set up a payment plan with tax authorities, and actively seek professional help from a trusted and local tax attorney to protect you from personal liability and negotiate with tax agencies. Employment taxes are not just another bill; they’re trust funds you hold on behalf of employees. The IRS and EDD treat late or unpaid payroll taxes as a serious offense. With swift action under the guidance of a trusted and local tax attorney, you can resolve issues before they spiral out of control.

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.

 

 

California Dreamin’? Not When the CDTFA Sends an Audit Notice

If your business receives a CDTFA notice for an impending audit, do not panic and review the notice and tax periods under audit – right away. The California Department of Tax and Fee Administration (“CDTFA”) is known for conducting thorough and often aggressive audits, especially as it relates to sales and use tax, fuel, tobacco, alcohol, as well as other taxes and fees that fund specific state programs. Whether you are a retailer, restaurant owner, contractor, or e-commerce seller, there are a few tips you should keep in mind when the CDTFA comes knocking.

Be sure to read the notice carefully, fully, and respond promptly to avoid missing the assigned response CDTFA deadline. Once you understand which tax period(s) are under audit, begin gathering the requested documentation and schedule time with your trusted and licensed local tax attorney immediately. No one should have to go through the audit process alone as CDTFA auditors are trained to uncover discrepancies. Small reporting errors can happen which could lead to unwanted questioning and misunderstandings surrounding industry-specific practices. Business owners will want to avoid accidentally volunteering unnecessary information. Additionally, your trusted and local tax attorney will know how to identify any overreaching or incorrect assessments that could be protected from CDTFA auditors. Your rights are protected and preserved throughout the process as a taxpayer which can be enforced by your tax attorney.

A few examples of the records that may be requested by a CDTFA auditor can include sales and purchase invoices, bank statements, sales tax returns, cash register tapes or POS reports, and exemption certificates (if applicable). Organization of business records is critical as business owners will want to avoid any opportunities for CDTFA auditors to overstate the tax liability within the tax period(s) under audit.

California businesses are often audited due to: tax filing inconsistencies (EDD, BOE/CDTFA, IRS), industry-specific benchmarks, unusual deductions or exemption claims, third-party tips or whistleblowers, etc. Your trusted and local tax attorney could help business owners get ahead of any of these possible issues by strategically maneuvering through auditor communications, challenging unsupported assumptions or estimates, or negotiating settlements or appeals.

If your business has received an audit notice or suspect you might be at risk, contact Wilson Tax Law Group, APLC  today so we can be an advocate in your corner, protect your business, minimize your liability, and stay compliant going forward. Leave it to our firm to help control the narrative and shape the outcome.

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 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.