Tax Disputes
Q. My accountant says I don't need an attorney for my tax problem. Is he correct?
A. Generally speaking, it is better to have an attorney whenever there is a dispute that could result in litigation. The reason for this is that accountants and return preparers do not have a confidentiality privilege under federal law. Also, while most certified public accountants are well versed in substantive tax issues, other individuals, who are not certified public accountants, may not be as well versed. Further, not many accountants become deeply involved in procedural issues with the IRS or the Department of Revenue. If your matter may end up in court, or if there are any potential criminal issues in the case, you will certainly want the protection of the attorney / client privilege. For further information, please see the articles section of this site.
Q. If I am contacted by an IRS Agent, should I talk to them?
A. Usually, it is in your best interests to postpone any conversations with a government agent. You should politely request that they provide you with a card, their name and telephone number, and advise them that you would like to consult with a legal representative before speaking to them. You should then consult with a legal representative of your choice who may then either contact the agent for you or, at least, can accompany you during any meetings with the agent.
Q. I have heard the term "Egg Shell Audit" used by some individuals. What is an "Egg Shell Audit"?
A. An "Egg Shell Audit" means an audit in which a person has previously engaged in conduct, which, if discovered by the auditing agency, might result in criminal charges. An analysis and decision must be made whether or not to cooperate in the audit. It is very important, as in any audit, to make sure that no misrepresentations are being made to the auditing authority, while at the same time, carefully protecting the client's legal rights and privileges. How these audits are handled can sometimes mean the difference between a civil penalty and a criminal charge.
Q. The IRS says I owe them a lot of money. I don't agree. What can I do?
A. The answer to this question depends in large part as to where you are in the process. If you are at the beginning, then you may be able to file a petition in the United States Tax Court without paying the tax. If you have already been assessed, then your remedies are more limited. One remedy is to pay the full amount of tax, penalty, and interest and to file a refund claim. If the refund claim is rejected, you must then file suit in Federal District Court. Other possibilities are to request an abatement of the tax, or to do an offer in compromise based upon doubtfulness as to liability. If there has been no previous judicial determination, then you may be able to obtain relief from collection in a collection due process appeal. Generally speaking, it is in your best interest to pursue the available remedies at the earliest possible date since they become more difficult to accomplish as time goes on.
Q. I have heard that it is possible to settle IRS liabilities for pennies on the dollar. Is this true?
A. Whenever I hear this statement I am always tempted to ask "How many pennies?". The IRS does engage in what is known as an "Offer In Compromise" program. Statistically, about 25% of the "Offers In Compromise" are accepted. The taxpayer must go through a detailed financial disclosure of his assets and income and liabilities. A computation is then made as to what the tax payer can afford to pay, usually based upon what is referred to as the "quick sale value" of his assets together with a sum of money equal to various periods of installment payments, depending on which program the tax payer is attempting to follow. While, certainly, in certain circumstances, the amount the taxpayer can afford to pay is substantially less than the total liability, the taxpayer can not simply offer a frivolous amount of money and expect it to be accepted.
Q. I can not pay all the money that I owe to the IRS. What will they do?
A. The IRS will send you a series of notices. The notices will become more demanding until you will have received a final notice of intent to levy. Once you have received this notice, if you do not take action within 30 days satisfactory to the IRS, they can levy your wages and salary, bank accounts, savings accounts, and even social security payments and pension payments. You have a number of options: 1) File a collection due process appeal if you've tried to resolve the problem and the IRS is being unreasonable. 2) Try to negotiate an installment agreement. 3) Try to negotiate an offer in compromise. 4) Consider filing bankruptcy, provided that the taxes for which you are liable are dischargeable in bankruptcy. You should be aware that, if you enter into an installment agreement or otherwise fail to pay the taxes, the IRS will also file a tax lien. If this tax lien is filed before you file bankruptcy, the lien will not be discharged and will continue to be a lien against any property you owned at the time it was filed.
Q. I have filed a false tax return. How can I correct this problem without going to jail?
A. The filing of a false tax return can be a state or federal crime. First, it is important that you establish a professional relationship that is confidential under the law. Accountants and return preparers do not have the same protections as attorneys under federal law. Both the IRS and the State of Florida have voluntary disclosure programs which, depending on your circumstances, if properly followed, often result in there being no criminal charges pursued. It is important to contact your representative and to take action before you are contacted by the IRS or the Department of Revenue. We have been successful in handling a number of these types of cases for a broad range of individuals.
Q. I have been served with an IRS summons. What should I do?
A. An IRS summons in an administrative subpoena. If you fail to comply with the subpoena, the IRS may seek to have the subpoena enforced in Federal District Court. If the Federal District Court orders you to comply with it and you fail to do so, you will be in contempt of the court order. There may be defenses to the summons, including, but not limited to, the Attorney / Client privilege, the privilege against self incrimination, the act of production doctrine, and other legal defenses. You should gather together the requested documentation and keep it in your possession. You should never destroy any records requested under an IRS summons or a Grand Jury subpoena.
Q. My employer has failed to pay his payroll taxes. I was a bookkeeper for his company. The IRS is now trying to assess a trust fund penalty against me. Am I liable?
A. The answer to this question is lengthy and complex. A very simple summary is, if you were in a position where you made decisions, or had power and authority to decide who should be paid and you paid parties other than the IRS while, at the same time, knowing that the payroll taxes have not been paid, then you may very well be held to be liable. Please see the outline on the trust fund penalty located on the articles page of this website.
Q. Can you represent both my wife and me in our tax matter?
A. The answer to this depends on whether or not there is a potential conflict of interest in doing so. For example, in tax matters, sometimes a spouse may be what is referred to as an "Innocent Spouse" if she had no knowledge of the issue. If so, that spouse may be able to avoid liability all together, which means that the other spouse becomes fully liable. This creates a conflict of interest and makes it inappropriate to represent both parties.
Q. Can I lose my professional license if I am convicted of a crime?
A. Many states, including Florida, have a provision that when an individual is convicted of a felony or a crime punishable by more than one year in prison, that their license can be suspended or revoked. This is often an important factor in negotiating plea agreements, particularly as to the crime to which an individual should plead, including, but not limited to tax crimes. This factor should be seriously considered as part of the strategy of any case where there may be criminal exposure.
Q. I am thinking of selling or refinancing my house. I just found out that I have a tax lien. Will I be able to sell my house?
A. Yes, provided that you reach an agreement with the IRS to pay an amount necessary to obtain a release of tax lien. If the proceeds of the sale will pay the full amount of the tax liability, they will require you to pay this amount. Otherwise, you will have to pay any equity in the property up to the full amount of the tax liability. Any buyer or mortgage company will require that this be done before they will go through with the transaction.
Q. I know that I am about to have a tax lien filed against me. What can I do to protect my assets?
A. With very few limited exceptions, if you are asking this question at this time it is too late. Under the Uniform Fraudulent Transfer Act, anyone who transfers assets, in an effort to place them beyond the reach of their creditors, when they know that an action has been or is about to be taken against them, creates a cause of action in favor of the creditor to set aside that transaction and to collect the money or retrieve the asset from the individual who received it. Often times, transferring assets to family and relatives simply drags them into the problem and costs them attorneys fees and costs, and can even result, in what are know as "Transferee" or "Nominee" liens being filed against them. Further, it can be a crime under certain circumstances.
Business / Real Estate Disputes
Q. What should I bring to my first meeting with an attorney?
A. You should bring a copy of any communications you have received from the other side including, but not limited to notices, letters, a copy of the complaint and summons (if a lawsuit has been filed and served), and any documents that may relate to the problem or dispute. If you are in doubt, bring more than you think is necessary. Many people waste valuable time and money by failing to bring the necessary documents to the first meeting. Feel free to call and ask the attorney what you should bring if you are still in doubt.
Q. How long does it typically take a court case to be resolved?
A. In most Central Florida counties, the court's objective is to complete the case within 2 years. In Federal District Court, the goal is 1 year for most cases. Of course, depending on the complexity of the case and the circumstances of the parties, these time periods can be extended and take longer.
Q. How much is this going to cost?
A. The answer to this question is often frustrating to both the attorney and the client. Because of the nature of litigation, it is difficult to predict with complete accuracy what the case will cost. This is because no one individual has complete control over the case. The actions of the parties, the lawyers on each side, the court, and even mediators can significantly impact the expense of a case. You should discuss up front with your attorney your objectives and goals in the case so that everybody is on board as to what they are trying to accomplish. Generally speaking, in litigation, other than personal injury, lawyers are paid on an hourly rate. The hourly rate is usually based upon their knowledge and experience in the area. Typically, there is a retainer set by the attorney based upon his expectations of the cost of the case. In addition to attorney's fees, there may be costs which include fees for consulting expert witnesses, depositions, witness subpoenas, and other expenses. This office uses a written fee agreement which sets out these items in detail.
Q. I have just been served with a summons and a complaint. What should I do?
A. You have 20 days from the date you are served within which to either file a motion or an answer. If you fail to do so, a default may be entered against you and then a final judgment may be entered against you for all the relief asked for in the complaint. You need to immediately contact legal counsel to discuss the case to determine if you have defenses, and to make a decision as to your course of action. Do not wait until the last minute. Do not assume that you will be able to find an attorney who can do this in a day or so. Some cases require extensive research, both as to the facts and the law.
Q. Will I be able to collect my attorney's fees from the other side?
A. If there is a provision in a contract or a specific statutory provision relating to the subject matter of your dispute, you may be able to recover your attorney's fees. In the absence of such a contractual provision or statute, generally speaking, attorney's fees are not recoverable. There are exceptions, such as Florida Statutes Section 57.105 which provides that, if, essentially, there was no merit to the litigation, then attorney's fees can be awarded as a sanction.
Q. I am about to become employed. I am being asked to sign a non-compete agreement. Will this be enforceable?
A. In Florida, if the agreement meets the test of reasonableness as to time and reasonableness as to geographic area, it is presumptively enforceable. However, depending on the circumstances of a particular case and / or of the particular trade or profession in which you are involved and the subsequent actions of the employer with regard to you and you employment agreement, these agreements can be defeated. However, you should not sign one assuming that will be the case.
Q. I know that I am about to be sued and / or have a judgmentfiled against me. What can I do to protect my assets?
A. With very few limited exceptions, if you are asking this question at this time it is too late. Under the Uniform Fraudulent Transfer Act, anyone who transfers assets, in an effort to place them beyond the reach of their creditors, when they know that an action has been or is about to be taken against them, creates a cause of action in favor of the creditor to set aside that transaction and to collect the money or retrieve the asset from the individual who received it. Often times, transferring assets to family and relatives simply drags them into the problem and costs them attorneys fees and costs