Law Office of Charles P. Kersch
Tax, Business,
and Estate Planning Specialist
Litigation and Tax Resolution Services
Tax Litigation
Resolving Tax Disputes Out of Court
When a dispute with the Internal Revenue Service (IRS) or state taxing authorities cannot be settled administratively, litigation is the last step to resolving a tax controversy. We strive to resolve each client's tax dispute as quickly, effectively, and without litigation, if possible. Many cases, however, can be more favorably settled in litigation.
At the Law Office of Charles P. Kersch we have a history of achieving such settlements by drawing on our attorney’s litigation skills and experience in positioning each case to proceed effectively to trial.
Representing Taxpayers in Litigation
Litigation can result from a number of different claims or disputes regarding tax laws, and, at times, successfully resolving a tax dispute requires litigation. If our clients' tax controversy proceeds to litigation, we develop and implement efficient, effective, and thorough trial strategies.
Common litigation situations include:
• Proposed Deficiencies
• Collection Disputes
• Claims for refund
• Bankruptcy
• Tax accounting controversies
• International reporting compliance
and tax cases
• Criminal tax matters
Audits & Controversy
Few things in life cause as much stress on an individual or business as an audit. Charles P. Kersch and his staff understand the time and the emotional stress—as well as the potential financial toll—an IRS audit can take.
Still, taxpayer’s have rights during an audit. By retaining counsel experienced in working and negotiating with the IRS, you retain a partner who manages the stress of dealing with the IRS for you, protects your rights and your interests and aggressively defends your reporting positions.
At the Law Office of Charles P. Kersch we specialize in representing individuals, businesses, trusts, partnerships and other entities that are under audit by the Internal Revenue Service, Colorado Department of Revenue and local taxing authorities. We know how the IRS operates and how its Revenue Agents are required to proceed in civil tax audits.
As a result, we are exceptionally well-positioned to help our clients understand tax procedures and evaluate your options. We aggressively work directly on our clients’ behalf to resolve tax issues and close audits as quickly as possible, and minimize any adjustments to the amount of taxes, penalties and interest due.
Employment Tax
The IRS recently announced it plans to increase the number and depth of audits and examinations of businesses and taxpayers subject to federal employment tax laws. At the Law Office of Charles P. Kersch, we specialize in representing businesses involved in employment tax disputes with the IRS.
Employee or Independent Contractor
For federal and state tax purposes, there are two classifications of workers: an employee or an independent contractor. The distinction between the two is important because it impacts the tax responsibilities of both the business and the worker. Recently, the government announced it plans to increase enforcement efforts in the area of worker misclassification by businesses. Businesses found to have misclassified workers as independent contractors rather than employees may be subject to significant back taxes and penalties and, in egregious cases, criminal prosecution.
If you are, or believe you may be, subject to a worker classification audit, contact the Law Office of Charles P. Kersch for advice.
Trust Fund Recovery Penalty
Employers are required to withhold income and social security taxes from the wages of its employees. These are commonly referred to as "trust fund" taxes because they are held in trust by the employer until it pays over that amount to the government.
The IRS can assess a Trust Fund Recovery Penalty (“TFRP”) against any person who is responsible for withholding, accounting for, or depositing or paying these taxes and who willfully fails to do so. The amount of the TFRP is 100 percent of the total unpaid taxes, and the IRS is very aggressive in pursuing unpaid payroll taxes. In addition to the Trust Fund Recovery Penalty, the government is quite willing to criminally prosecute those who willfully fail to file payroll tax returns, or to pay payroll taxes.
Liens & Levies
IRS Collection Actions
The IRS and state taxing authorities are notoriously aggressive debt collectors. If you owe taxes, the IRS can file liens against your property, levy your bank accounts and garnish your wages until the liability is paid in full. This includes liabilities for income tax, employment taxes, sales and use tax, or excise tax. The IRS can also, in certain circumstances, seize property and apply it to the satisfaction of the outstanding liability. Such action can damage an individual or business by causing loss of assets and income as well as by hurting the taxpayer’s credit, reputation and ability to meet other financial obligations.
Tax Liens
The IRS can place a federal tax lien on the property of any taxpayer who owes unpaid taxes. The tax lien publicly secures the IRS’s interest in the property as a creditor and will, generally, not be removed until the entire tax liability is satisfied. Having a tax lien can make it difficult for you to borrow against the property and, in most instances, impair your ability to sell the property with a clean title. The placement of a tax lien can affect your credit and make it more difficult for you to pay your tax liability, as well as your other debts.
Tax Levies
When a taxpayer owes unpaid taxes, the IRS can levy against the taxpayer’s property, including bank accounts, investments, personal property and wages until the tax is paid in full. The financial impact of a tax levy can be devastating.
At the Law Office of Charles P. Kersch, we can help you avoid the damaging effects of IRS liens, levies and seizures. If the IRS is threatening to lien, levy on or seize your property, contact us right away so that we can work with you to suspend collection activity while exploring ways to manage your tax debt.
Offer in Compromise
Offer in Compromise
When a taxpayer owes more taxes than they can ever afford to pay, an Offer in Compromise allows them an opportunity to settle the outstanding tax liability for less than the amount actually owed. The IRS will usually agree to an Offer in Compromise when it is clear that the taxpayer cannot pay the entire tax liability, even if given several years to do so.
To obtain this relief, the taxpayer must make a thorough and extensive disclosure of their financial situation. Once the IRS is satisfied that the taxpayer does not and will not have the funds or ability to pay the entire tax liability, it is usually willing to negotiate a settlement of the liability for a lesser amount.
Installment Agreements
When a taxpayer owes more taxes than they can afford to pay immediately, the IRS is often willing to allow the taxpayer to enter into an Installment Agreement to pay the entire tax liability in monthly installments over a period of five years or less. Again, the IRS will generally conduct a thorough examination of the taxpayer’s financial situation to determine how much they can afford to pay each month until the entire tax liability is paid. Installment Agreements are available to individual taxpayers as well as businesses.
Penalty Abatement
When a taxpayer owes unpaid taxes, penalties and interest accrue at an alarming rate. In a short period of time, interest and penalties can equal the original amount owed. Often penalties can be abated if there is reasonable cause and no willful neglect. Generally, the IRS will abate penalties when a taxpayer can show the "exercise of ordinary care and prudence," but were still unable to file their tax return or pay their taxes on a timely basis. Additionally, the success of penalty abatement depends on the taxpayer's past history of filing their tax returns and paying their taxes.
Offshore Accounts
Contrary to current popular belief, it is not illegal to have foreign bank accounts. In fact, there are many legitimate reasons for U.S. taxpayers to maintain foreign accounts.
Nevertheless, taxpayers with foreign assets (bank accounts, investment accounts, foreign corporations, foreign trusts, etc.) must disclose these assets annually, and they must report income from these offshore accounts on their U.S. income tax returns. They must also declare any offshore or foreign bank accounts over which they have signatory authority, regardless of whether they receive any income from the account.
Taxpayers are required to report information identifying their foreign accounts by filing a Form TDF 90-22.1, Report of Foreign Bank and Financial Accounts - more commonly known as an FBAR - no later than June 30th. Anyone with an offshore account bank account who doesn't file an FBAR can be hit with both criminal tax penalties, and civil tax penalties.
In an effort to encourage taxpayers with offshore accounts to come into compliance, on January 9, 2012 the IRS reopened its Offshore Voluntary Disclosure Program for Undisclosed Offshore Accounts.
Voluntary Disclosures
Taxpayers who have violated the tax laws are in danger of prosecution by the government. If the IRS has not begun an investigation, taxpayers can effectively avoid prosecution by self-reporting prior tax violations to the IRS by taking advantage of the IRS Voluntary Disclosure Program. There are two different types of Voluntary Disclosures: one deals with general tax matters and the other is specifically for offshore accounts.
Voluntary disclosures are extremely sensitive and complex and they are subject to strict rules and guidelines. Once taxpayers are accepted into the voluntary disclosure program, they must provide the IRS with full cooperation while their case is being reviewed. Thus, a taxpayer's eligibility for this program must be carefully evaluated prior to contacting the IRS.
Bankruptcy
Taxes & Bankruptcy
Most people, including many bankruptcy attorneys and tax professionals, don't know that certain taxes can be eliminated through the bankruptcy process. Even if they were aware, most tax professionals do not know how to execute or apply the multifaceted legal analysis to determine if bankruptcy can be an effective solution to your tax problem. The rules governing whether and when certain taxes may be discharged are complex, and their specific application to a taxpayer depends on the individual facts and circumstances of each case.
Although the intersection of the United States Bankruptcy Code, the Internal Revenue Code, and IRS lien and levy rights is complicated, bankruptcy relief is often the best way to solve a serious tax problem and stop IRS collection activity. The filing of a bankruptcy case automatically and immediately stays (stops) IRS bank account levies and wage garnishments, and enables the taxpayer to either obtain a discharge or reorganize his or her tax liabilities.
To properly handle tax matters in the Bankruptcy Court, you need an attorney who is experienced in two worlds, tax and bankruptcy. If you have a serious tax or financial problem, contact the Law Office of Charles P. Kersch to learn more about our tax relief services and possibly discharging taxes in bankruptcy.