Business Tax Matters

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Texas Business Tax Matters

Employers and business owners throughout the U.S. and North America, as well as international and multinational business owners, rely on the knowledge and experience of Texas business tax attorney Lawrence Brown.

Brown, PC, is able to provide experienced representation to businesses and individuals across a great variety of tax controversies and tax litigation matters involving business tax and employment taxes such as the following:

• Worker classification disputes related to independent contractors versus employee designations.
• Trust Fund Recovery penalties and other types of payroll tax issues, including those related to the use of a professional employment organization (PEO)
• Executive compensation, reimbursed expenses and fringe benefit issues
• State and local sales tax reporting and commercial property tax disputes

About Our Business Tax Practice

As a business owner or executive, making informed tax-related decisions is critical. This is true whether you are planning ahead, you need to rectify an oversight or mistake, or you are dealing with the Internal Revenue Service (IRS). Each business tax attorney at Brown PC has extensive experience representing local, regional, national and international businesses with respect to:

Private Letter Rulings

Private Letter Rulings allow businesses to determine in advance whether the IRS is likely to challenge a particular tax position. Seeking out the IRS’s opinion when pursuing a complex transaction can be an effective means of risk management for all parties involved. However, securing the specific opinion you need can be challenging, so experienced legal representation is essential.

When You Need to Request a Private Letter Ruling Regarding Tax Consequences of Planned Transactions

If your business is about to embark on complex transactions, such as selling offshore manufacturing installations or preparing for a merger and acquisition, your company will require a detailed prediction as to the tax consequences. While your tax advisor will have an opinion as to the tax consequences, you may also wish to make a private letter ruling request to the IRS.

If your business is preparing to petition the IRS for a private letter ruling, the assistance and guidance of an experienced tax litigation attorney is recommended. Lawyer Lawrence Brown of Brown, PC has decades of experience handling tax controversies.

Preparing your request for a private letter ruling will require detailed descriptions of an array of specific facts. Attorney Brown, a former Trial Attorney with the Department of Justice Tax Division, is well acquainted with potential pitfalls and problem areas.

Sometimes clients seek a private letter ruling in anticipation of an expected IRS tax audit — a prudent measure in many cases when there are issues such as valuation, capital gains or employment tax disputes to take into account. For many businesses, understanding the likely consequences of a complex transaction before entering into the transaction is of vital importance.

IRS Income Tax Audits

Our attorneys regularly represent businesses in Texas and elsewhere in complex IRS income tax audits. When facing a high-stakes audit, substantiation is key—and, if your company cannot produce adequate substantiation to justify the positions taken on its federal returns, then an alternate defense strategy will be required. If your company is facing an IRS income tax audit, our attorneys can help you make informed decisions while communicating with the IRS on your company’s behalf.

IRS Payroll Tax Audits

We also handle IRS payroll tax audits for our business tax clients. These audits have become more prevalent in recent years, and the IRS has shown increased willingness to pursue substantial penalties for all forms of payroll tax-related noncompliance. This includes not only penalties for companies, but also penalties for individuals who are involved in failing to properly account for employees’ payroll taxes or filing inaccurate returns.

Criminal Tax Investigations

Companies and individuals can face substantial exposure in criminal tax investigations as well. Our attorneys handle high-stakes investigations involving all types of criminal allegations, from knowingly implementing abusive tax shelters to willfully underreporting income and claiming fraudulent business deductions. If your company has received a subpoena or target letter from IRS Criminal Investigation (IRS CI), it is critical that you engage an experienced Texas business tax attorney promptly.

IRS Audit Appeals

If you disagree with the outcome of an IRS business tax audit, the next step in the process is to file an IRS audit appeal. In most cases, this involves going to the IRS’s Independent Office of Appeals, though businesses can challenge the IRS’s audit determinations directly in the U.S. Tax Court in some cases. Our attorneys have extensive experience handling complex appeals in both venues.

Civil and Criminal Business Tax Litigation

Along with IRS audit appeals, our attorneys have extensive experience handling virtually all other types of civil and criminal business tax litigation as well. If your company is unable to secure a favorable resolution at the audit or investigation stage, our team can provide effective representation in federal court. We have had significant success achieving favorable results for our clients both in pre-trial litigation proceedings and at trial.

International Tax Compliance

We are also able to help businesses in the U.S. and abroad with international tax compliance. Businesses that owe filing obligations to the IRS must report their worldwide income from all sources, and they must also disclose their offshore accounts and other foreign financial assets annually. A Texas business tax attorney at Brown PC can assist with meeting these requirements—and proving compliance with these requirements when necessary.

IRS Collection Actions (Liens, Levies and Seizures)

If your business is facing an IRS lien, levy or seizure, it is important that you take appropriate responsive action promptly. These collection actions can have devastating and far-reaching financial implications, and it is critical to defend against them to the fullest extent possible.

Offers in Compromise, Installment Agreements and Penalty Relief

Our attorneys are also able to assist companies with submitting offers in compromise, negotiating installment agreements and seeking penalty relief from the IRS when necessary. We can help you consider any viable alternatives as well, and we can develop and execute an approach to resolving your company’s federal tax debt that minimizes any ongoing risk and long-term obligations.

Voluntary Disclosures

If you have concerns about facing IRS scrutiny due to a business, corporate or partnership tax violation, submitting a voluntary disclosure to the IRS might be the best path forward. However, voluntary disclosures can be risky, and submitting a voluntary disclosure isn’t an option in all cases. We can help you make the right decisions.

Representative IRS Matters We Handle for Texas Businesses

Much of our practice is devoted to representing corporations, partnerships, owners and executives, and other business clients in complex IRS matters. Our team, led by founding attorney Lawrence Brown, has decades of experience helping clients avoid substantial tax liability and penalties in a wide range of federal tax controversies. Some examples of IRS matters we have recently been handling on behalf of our clients include:

• Abusive Tax Shelter Investigations
• Affordable Care Act (ACA) Investigations
• Employee Retention Credit (ERC) Investigations
• Paycheck Protection Program (PPP) Investigations
• Offshore Account and Foreign Financial Asset Disclosures
• Trust Fund Recovery Penalty Enforcement and Disputes
• Worker Classification Disputes and Other Payroll Tax Matters

Industries We Serve

Within our business tax practice, we serve clients in a wide range of industries. Over the years, we have been privileged to represent some of the largest companies and most successful business owners in the world. With this in mind, here is just a small sampling of the industries we serve:

• Advanced Manufacturing
• Aerospace, Aviation and Defense
• Arts, Entertainment and Professional Sports
• Maritime and Offshore Operations
• New Technologies
• Oil, Gas and Alternative Energy
• Professional Services

When Fast Action Is Required to Resolve Structural Tax Problems

Attorney Brown, a former Department of Justice Tax Division trial attorney, relates the following example of the types of complex cases he regularly handles on behalf of clients in the business and employment arena:

Case Study: Employment Tax Controversy

A local company with roughly 70 employees and total revenue of approximately $10 million had fallen behind in paying the federal taxes withheld from employee paychecks to the IRS. At the time we were hired, the total due to the federal government was well in excess of $1 million. IRS agents were within about 72 hours of shutting down the business.

Mr. Brown contacted the IRS group manager and requested that the IRS wait one week before shutting down the business. The request was granted. Our team worked nearly around the clock for approximately five days creating financial statements and financial models while working with the company CFO on overhead reduction. We proposed an installment agreement to the IRS that allowed the tax debt to be paid over a period of approximately 30 months and kept the company in business.

Employers have the obligation to follow tax regulations and laws governing a wide range of issues, such as:

• Social Security tax
• Medicare tax
• Employees’ income tax
• Employer withholding tax
• Taxation of fringe benefits
• Health insurance
• 401(k) retirement savings accounts
• Pensions
• Officer and executive compensation

Special problems may arise when businesses merge or acquire other businesses. In some cases, the two companies have difficulty merging the two payroll systems. Questions regarding what to tax, whom to tax and how much to tax can be vexing. Tax advisors and attorneys may give advice and help along the way — but when questions become controversies and controversies become fodder for litigation or criminal investigations, astute employers seek top-notch legal counsel.

Tax litigation attorney Lawrence Brown is most often contacted by employers regarding employment tax disputes once a tax audit has begun, a criminal investigation is underway, or criminal charges have been filed. Lawrence Brown is a former Trial Attorney with the Department of Justice Tax Division. In private practice, he focuses on resolving tax controversies affecting businesses, employers, professionals and high net-worth individuals.

When Fringe Benefit Deductions are Questioned in Tax Audits

An IRS tax audit may uncover — or may be triggered by — special factors such as the valuation of questionable fringe benefits that you receive as an employee, give to your own employees, or claim as a business expense. Examples of fringe benefits that the IRS has sometimes considered taxable income in the past have included:

• Chauffeurs or use of company vehicles
• Health club memberships
• Life insurance policies
• Housing provided as a benefit of employment
• Bonuses, rewards and gifts to employees

If you have encountered challenges to fringe benefits that you received or that you gave to your employees, it is best to seek to resolve the controversy as directly as possible through the proper channels. An experienced tax litigation lawyer who has a track record of success delivering solutions to tax controversies is a valuable ally and may prevent further problems, including potential civil penalties and criminal tax investigations.

Tax litigation lawyer Lawrence Brown is a former Department of Justice Tax Division Trial Attorney who focuses his law practice on tax controversies and litigation. His extensive, in-depth experience in all venues and areas of tax problems is a definite advantage for his clients who face questions over the value of fringe benefits for tax purposes in IRS audits.

Facing High-Stakes Civil Tax Audits

Brown, PC represents business owners, attorneys, doctors, CPAs and numerous other professionals in criminal and civil tax cases. A substantial part of our representation involves handling the problems associated with tax audits.

When the IRS audits a tax return, a taxpayer must prove that he or she is complying with tax laws and regulations. The threat of an audit is enough to keep most people striving to meet tax obligations fully. Nonetheless, the IRS selects a certain number of businesses and individuals every year to go through the civil tax audit process. The IRS is currently doubling its efforts to improve compliance with tax laws by sending out Revenue Agents and Special Agents (criminal investigators).

Some tax liabilities, once established with the IRS, are not dischargeable in bankruptcy and essentially never go away. Additionally, a variety of tax problems often come to light in the process of an IRS civil tax audit. It is not uncommon for IRS Revenue Agents (civil auditors) to refer a taxpayer to IRS Criminal Investigation. It is advisable for any individual or business owner to seek the counsel and assistance of an experienced tax lawyer in the event of an IRS tax audit.

Legal Counsel Regarding IRS Tax Collection Methods: Liens, Levies and Seizures

It is nearly always distressing — and sometimes catastrophic — when the IRS resorts to extreme measures in tax collection methods including the following:

• Liens on real estate and other types of personal or commercial property
• Levies on bank accounts and other financial resources
• Seizures of equipment or other valuables

Former clients of Brown, PC have sought counsel and assistance in the face of pending or already transpiring liens, levies and seizures.

Businesses may experience total financial collapse in the face of heavy-handed tax collection actions such as levies and seizures.

If you are a professional, a business owner or simply a high net-worth individual anticipating tax collection by force, you are advised to seek the best, most suitable legal counsel you can afford. Brown, PC is a strong advocate on behalf of people facing tax controversies and tax litigation.

Many previous clients of the law firm have found relief with the assistance of tax lawyer Lawrence Brown, a former Trial Attorney with the Department of Justice Tax Division. He is often able to bring about a favorable outcome such as the following:

• Release of liens
• Prevention and release of levies
• Prevention of seizures and return of seized property

Is Your Business Under Investigation for Suspected Tax Crimes?

Brown, PC represents many distinguished professionals facing criminal and civil tax cases of their own. Such professionals are sophisticated, discerning, and demanding. They understand the importance of experience — and the importance of contracting legal services from a lawyer with extensive knowledge and experience in his field.

Attorney Lawrence Brown is sought after to provide knowledgeable counsel and effective advocacy in IRS criminal investigations. A former Department of Justice Tax Division Trial Attorney, he is very well-versed in all of the ins and outs of criminal tax cases and investigations.

Many clients of Brown, PC have significant personal wealth. Such individuals recognize the value of working with an attorney who is devoted solely to resolution of complex criminal and civil tax problems — as opposed to general practitioners who may be excellent lawyers but do not have the depth of experience that Attorney Brown has gained both in private practice and as a former Department of Justice Tax Division Trial Attorney.

In many cases, a criminal tax case can ultimately be resolved at the civil, administrative level without criminal charges being filed. Allow Attorney Lawrence Brown to put his extensive background in criminal tax law to work to resolve your potential or existing criminal tax law case.

When the IRS Issues Requests for Technical Advice Regarding Your Audit

In the course of an IRS audit, agents may have encountered highly complex issues and requested technical advice from the IRS. Attempting to handle an audit with this sort of complexity by yourself, or relying on your accountant or an attorney in general practice, is unlikely to achieve optimal results. Sophisticated, complex issues related to Technical Advice Memoranda (TAMs) from the IRS can cause even experienced CPAs to stumble.

Lawrence Brown focuses his long-standing tax litigation law practice precisely on highly complex tax controversies such as these. Early intervention by tax lawyer Lawrence Brown may save your business many thousands, and even millions of dollars in potential tax liabilities where complex issues are involved.

IRS Advice Requests

Or perhaps technical advice has already been requested and received and now your IRS audit has taken a turn for the worse, becoming more problematic and likely to result in large penalties or even criminal charges. Your IRS tax audit and your real financial situation may be made more difficult by complications such as the following:

• Loans to shareholders
• Multiple-year financial transactions
• Extraordinary losses or extenuating circumstances

Again, attempts to explain such matters to IRS agents can easily go awry. An attorney with in-depth knowledge of the system can guide you through the process to your best advantage. Your best option is to have quality legal counsel in this matter.

Related Payroll Issues

As part of the recent IRS employment tax audit initiative dating to late 2009 and early 2010, the IRS is seeking to hold both individuals and businesses more accountable for existing tax laws. In particular, the tax audit initiative has been examining tax loopholes and gaps involving the following:

• Fringe benefits
• Expense reimbursement
• Officer compensation
• Other related payroll issues

The payroll issues include the matter of the 941 quarterly tax returns that employers are supposed to file while submitting withheld payroll taxes. In particular, the IRS is seeking to hold employers accountable for late filing of form 941 and non-filing of form 941. Non-payment of the withheld payroll taxes can cause the IRS to lose income, including interest on late payments.

If your business has fallen behind on filing of 941 quarterly tax returns and you have received a notice from the IRS, you are strongly urged to talk to an attorney before communicating with the IRS about this or any other potential audit “hot button” issue. Lawrence Brown has helped many businesses achieve positive outcomes in cases of late filing or non-filing of 941 tax returns.

Are Reimbursed Expenses the Issue in Your IRS Audit?

Is the IRS questioning you regarding the legitimacy of reimbursed expenses? Are auditors alleging that your deducted expenses did not meet the criteria of “ordinary and necessary” expenses (defined as expenses that are appropriate and helpful to your trade or business) that the IRS expects in the case of deducted reimbursed expenses?

Gray areas in acceptance of reimbursed expenses may come to light surrounding such items as expenses appearing to benefit a spouse, expensive dinners and entertainment and apparently unnecessary travel costs. Have you been accused of erroneously labeling family vacations as work travel?

The IRS may be delving into the details of your business and employment tax matters in the context of an audit including a variety of issues and questions such as the following:

• Fringe benefits
• Employment tax disputes
• Valuation disputes
• Reimbursable costs

The IRS may be pursuing a civil audit or a criminal investigation. Whatever the situation, your need for the best legal counsel you can afford may be great when thousands or millions of dollars — and perhaps the viability of your business enterprise — are at stake. Discuss your tax controversy with a professional tax litigator at your earliest opportunity to maximize the likelihood of a favorable resolution.

Attorney Lawrence Brown is available to consult with you regarding your IRS audit or criminal tax matter. He is a former Department of Justice Tax Division Trial Attorney with 18 years of experience representing taxpayers in private practice. While the law firm is based in Dallas-Fort Worth, Texas, clients across North America and throughout the world have come to rely on the knowledge and capabilities of Brown, PC.

As part of its National Research Program begun in 2010, the Internal Revenue Service (IRS) has examined tax returns of thousands of small, medium-sized and large businesses looking for areas of under-compliance and under-taxation. These special audits focused on several areas of concern including the following:

• Worker misclassification
• Fringe benefits
• Officers’ compensation
• Employee expense reimbursement plans
• Non-filers

Scrutiny of employee expense reimbursement has focused on employer reimbursements that have not been taxed as income, including the following:

• Tool and equipment expenses
• Travel expenses, including airplane tickets and train tickets
• Hotel expenses
• Entertainment
• Meals

The IRS expects employers to have accountable plans in place to keep close tabs on expense reimbursement, protect reasonable expense reimbursement and prevent abuse in this area. Is your business facing an audit and do you anticipate scrutiny related to expense reimbursement? Attorney Lawrence Brown of Brown, PC, can advise and represent your business.

Our Firm Advises Businesses and Individuals on Tax Penalty Relief

Certain businesses and individuals are expected to accurately report income on a quarterly basis. When taxes are underreported and underpaid, penalties may be assessed at the time of the next tax return deadline. If failure to report income is chronic or involves large amounts of money, criminal charges may also result.

Taxpayers may find relief from penalties, through effective communication with the IRS. Perhaps you late filed a return or underreported your business income because your credentialed advisor was ill or injured.

You may not believe that there is a valid explanation for your failure to timely file a return or fully report income to the IRS, but an experienced tax lawyer, upon review of the facts, may discover the explanation that will pave the way to relief.

The IRS may abate reasonable penalties when there is good cause such as death, fire or other special circumstances. To maximize the likelihood that your request for tax penalty relief will be approved, contact an experienced attorney. Tax lawyer Lawrence Brown focuses his law practice on tax controversies and litigation. Many clients of Brown, PC have had very substantial penalties abated.

Tip Compliance a Hot Issue in Your IRS Audit?

An often “hot” issue with the IRS is that of tips that waiters and waitresses collect in cash — funds which may leave no paper trail. The IRS is interested in ensuring that waiters and waitresses claim their tips on tax returns. In other professions, also, cash dealings may be left to the honesty of taxpayers when it comes to claiming income and paying income tax. The publicity given to the importance of tip compliance serves as a reminder of the principle that all income should be reported, regardless of whether it appears on a paycheck.

The IRS Is Interested in Tracking Down Lost Income Tax Due to Underreporting Tips

One or two waiters or waitresses who fail to report their tips for tax purposes may leave an insignificant amount of income unaccounted for with the IRS. However, all waiters and waitresses nationwide, month after month and year after year, together earn billions of dollars in tips. Failure to include this income in tax returns results in great losses to the government.

Was Your Bar or Restaurant Observed or Raided?

In an effort to keep business owners aware of this issue, the IRS sometimes makes raids upon restaurants and bars to check on what methods management uses to ensure compliance in tip reporting by waiters and waitresses. Do managers ask for a full accounting from each food server at the end of every shift and enter tips collected on the books? Are employees made aware through training that tips must be reported as income?

If you, the business owner or manager, have been subjected to questioning or investigation about your employees’ tips and reporting procedures, you are strongly encouraged to discuss the situation with an experienced tax lawyer. Were IRS agents observing operations at your place of business? Have you been issued a subpoena of records and training materials? Contact Brown, PC to schedule a consultation.

Do You Face Trust Fund Recovery Penalty Questions from the IRS?

When an employer withholds funds for taxes from employees’ paychecks, it is expected to hold those funds in trust and pay them over to the IRS. The failure to manage the trust fund and pay those withheld taxes to the IRS in a timely manner is cause for scrutiny, potential penalties and even criminal prosecution. The penalties for mismanaging the withholdings trust funds and failing to turn the government’s share over in time are equal to 100% of the amounts that have gone unpaid.

Contact Brown, PC to schedule a preliminary case evaluation of your Trust Fund Recovery Penalty (TFRP) matter.

Responsibility for mismanagement of salary withholding trust funds may be assigned to any person in his or her individual capacity who has signature authority over the trust funds, including CPAs, CEOs and members of the board.

Responsibility for trust fund penalties cannot be discharged in bankruptcy. A company may go out of business, yet the IRS will continue to pursue you in your individual capacity.

The stakes are high and your need is great for experienced, qualified legal counsel if you are grappling with trust fund recovery penalties associated with allegedly mismanaged withheld taxes.

If you or your company faces this predicament, Attorney Lawrence Brown is an ideal resource. A former Department of Justice Tax Division Trial Attorney with 18 years of experience in private practice handling IRS tax controversies. Clients of Brown, PC range from high net-worth individuals to large privately held businesses. The law practice, located in Dallas-Fort Worth, Texas, represents clients nationwide and worldwide.

Trends in IRS Investigations

Every year, the Criminal Investigations Division of the IRS sets goals for the number of criminal tax investigations it will complete and the rate of conviction it wants to achieve. In recent years, the IRS has stepped up its enforcement efforts, driven by policies that emphasize collecting tax revenue from all potential sources.

Generally speaking, the IRS tries to devote at least 50 percent of its investigative time and resources to “legal source tax crimes.” This category of crimes includes many of the most common tax charges such as:

• Tax refund-related fraud
• Crimes involving tax return preparers
• Failure to file tax returns
• Submitting false information
• Employment tax fraud
• Tax evasion

Trends From 2009 Through 2011

In 2009, the IRS initiated 4,121 investigations. That number rose to slightly over 4,700 in 2010 and 2011. The IRS then recommended prosecution in 60-65 percent of those cases.

Of the cases prosecuted, the IRS achieved a high (but decreasing) conviction rate each year:

• 2009: 81.9 percent
• 2010: 71.9 percent
• 2011: 68.9 percent

More than 81 percent of those convicted were sentenced to federal prison for their crimes. Others received home detention, a sentence to a halfway house or a combination of both.

What Does It Mean for You?

These numbers show that it is not impossible to overcome criminal tax charges levied against you by the IRS. At Brown, PC, we have helped many high-net-worth individuals and corporate entities minimize or avoid criminal tax penalties. With the help of Lawrence Brown and our entire team of experienced tax attorneys and IRS Enrolled Agents, you can protect yourself, your family and your business from the harsh consequences of tax charges.

We know the IRS from the inside out. Let us put our knowledge to work for you.

Valuation Disputes

Questions of valuation of assets come into play in many areas of the law including the following:

• Divorce
• Bankruptcy
• Purchase and sale agreements
• Insurance property loss claims
• Capital gains taxation
• Gift taxes
• Estate taxes
• Tax liability and reporting requirements for fringe benefits in employment

Valuation questions may be a point of contention in a civil tax audit, a criminal tax investigation or a proposed purchase or sale of a business. Parties in a proposed business merger or acquisition may make private letter ruling requests of the IRS which require accurate reporting of value of assets.

When large sums of money are involved, the viability of a business or professional practice may be at risk. An experienced tax attorney is a valuable advocate for business owners and high net-worth individuals engaged in valuation disputes with the IRS.

An Initial Consultation Is Only One Call Away with a Texas Business Tax Attorney

Call 888-870-0025 or contact us online to discuss your employment-related tax concerns with litigation lawyer Mr. Brown. Centrally located in Texas, our boutique law firm serves clients from across the U.S. and around the world.