During my 30 plus year career working for and against the Internal Revenue Service (IRS), I read many different books and articles on the subject of tax representation. Some of the reference materials I read were technical in nature and recited the IRS code and regulations verbatim, and others were nothing more than robotic step-by-step procedural manuals. Most of the books were too complicated because they were code and regulation-driven and I became frustrated trying to understand all that mumbo jumbo (technical tax term of art). None of the books I read nor seminars I attended were very interesting and informative, and none of them taught me the tools of my trade, i.e. the nuts and bolts of representing a client before the IRS.

In February of 1990, I left the IRS to begin my tax practice. I shared a small office with another attorney who was also just starting out on her own. I did not have a single client, and I was worried about so many things such as how to build a client base, how I was going to pay my monthly office rent and even small details such as when I would be able to buy my first copy and fax machines. I was also concerned that, as a sole practitioner, I did not have a mentor willing to teach me how to effectively run and manage a tax practice.

In the early days of my practice, I searched without success for a how-to guide that would provide me with step-by-step instructions on what to do and what not to do while I was representing a client. I was looking for a book that would lay out in plain English without referring to code sections, sub-sections, and regulations the tools, techniques, and procedures that, over time, would allow me to become a successful tax representative. What I hoped to learn when all else failed was a series of sound and battle-tested principles, philosophy, and methodology that I could rely on when I was confronted with difficult decisions to make on a case.

Well, twenty-three years have passed by so quickly, like a blink of an eye. When I first started my practice, most of my clients were older than me, and now, most of my clients are younger. The Dow Jones Industrial Average stood at 2,800 when I began my practice, and now, as I write this introduction, the Dow is over 15,000. That is why I thought it was about time for me to take the initiative and to put down in writing my experience and the things that I learned while representing my clients over the years.

The title of these books, “The Art of Tax Representation IRS Audit & Appeals / IRS Collections,” is illustrative of what I believe tax representation is. It is truly an art form. Effective tax representation is the ability to manage client expectations, deal with IRS personnel (personalities, competence, and experience levels), understandcomplicated technical tax and procedural issues and have the ability to choose the right procedure at the right time and the experience to make the correct judgment call in crunch time.

The art of tax representation is being proactive instead of reactive to the ever-changing facts and circumstances of a case. It’s the ability to strategize and to figure out a way to arrive at a global resolution of a client's tax problems for all the years at issue instead of just the isolated tax year under examination. It’s looking at tax representation with a big picture, bottom line approach, and mentality. As you can see, there is a lot to learn, and it’s not an easy thing to master.

Some of the techniques discussed in this book are obvious, and other skills need to be developed over time and through years of practice. But if the techniques are consistently practiced and applied, they will yield great results. So please consider these techniques; study them and work with them, and the confidence that you gain through hard work and experience will be evident to your clients and, more importantly, to the IRS Agents that you work with.

Your ultimate goal professionally is to develop a “feel” for your case. What I mean by “feel” is having the ability to understand where you are in the audit and knowing exactly what to do to win it (procedurally and technically). "Feel" is also having the ability and the experience to stop and re-evaluate your case before making your next move because something the Agent said or did is out of the ordinary and just doesn’t feel right. Some representatives go through their entire careers never knowing, understanding or experiencing what “feel” is. I hope that you will read "The Art of Tax Representation" and be one of the few that does.

Why is the IRS Investigating Taxpayers with Foreign Bank and Investment Accounts?

Twenty eight years ago I was appointed the Tax Haven and Offshore Banking Coordinator for the IRS in Los Angeles. At that time the IRS was investigating taxpayers who used offshore bank accounts in tax haven countries to hide income from legal and illegal activities. The IRS has always been concerned that taxpayers failed to properly report their interest in foreign bank accounts to hide the fact that they were diverting unreported income to these foreign accounts. In addition, the IRS was concerned that U.S. persons were failing to report their investment income (interest, dividend and capital gain income) earned on these foreign accounts on their U.S. income tax returns.

Due to the enactment of the Foreign Account Tax Compliance Act (FATCA) in 2010, and other enforcement action the IRS now has the tools and laws in place to identify U.S. Persons who failed to disclose their interest in a foreign bank account FinCEN 114 (FBAR) and failed to file required foreign information returns such as Forms 5471, 5472, 8938 and 3520 among others.

Since 2009 more than 50,000 taxpayers have come forward and participated in the Offshore Voluntary Disclosure (OVDI) and Streamlined programs. The IRS has collected over 7 billion dollars from these compliant taxpayers. The IRS’s goal is to audit, penalize and in some cases initiate criminal investigations of taxpayers who had the opportunity to voluntarily come forward but failed to participate in one of the offshore programs. 

Every business owner should know what to do if they are contacted by the Internal Revenue Service (IRS), California Franchise Tax Board (FTB)  and the California Employment Development Department (EDD) for an audit. I prepared a series of guides about these tax agencies to educate, and prepare business owners for an audit, appeal or collection matter.

This guide is about the EDD and California State payroll tax audits. My hope is to help business owners  understand the EDD audit, settlement, appeals, and collection processes and the many ways they can drastically reduce tax liabilities and penalties by using the system to their advantage.

In this guide I answered many of the questions my client's asked me over the years about the EDD. I hope you will benefit from what I've learned while representing hundreds of cases during the past 28 years. I answered questions such as what forms to file to reduce the auditor's proposed assessments, how to   eliminate or substantially reduce EDD penalties, and what procedures Employers can use to make the EDD system work for them. As in everything in life, experience matters and I want to share my many years of experience with you. So, let’s get started, let's be proactive and learn about the Secrets of the EDD.