Tax Resolution Services: How to Avoid IRS and State Tax Scrutiny – Your FAQ Guide with Mike Habib, EA

Great question – let’s start with the basics. Tax resolution services are specialized professional interventions designed to fix tax problems before they spiral out of control. Think of it as your tax emergency room: we diagnose the issue, negotiate with the IRS or state agencies, and implement a cure.

Common scenarios where my clients seek resolution include:

– Unpaid back taxes leading to liens, levies, or wage garnishments.
– Audit representations for IRS, FTB, EDD, or CDTFA examinations.
– Penalty abatements for reasonable cause (like illness, natural disasters, or honest mistakes).
– Offer in Compromise (OIC) to settle tax debts for less than owed.
– Installment agreements for manageable payment plans.
– Innocent spouse relief when a partner’s errors drag you down.
– Payroll tax disputes for businesses facing EDD audits.

As an EA licensed by the U.S. Treasury Department, I’m one of the few pros authorized to represent you directly before the IRS in any state – no geographic limits. I’ve resolved over $50 million in tax liabilities for clients nationwide and abroad. One expat in Dubai owed $180,000 in back taxes; we secured an OIC reducing it to $25,000. Experience like that builds trust – and results.

Pro tip: Don’t wait for a notice. Early resolution prevents escalation. My Los Angeles office serves as a hub, but virtual consultations make help accessible from New York to New Zealand.

The IRS isn’t out to get you personally, but their algorithms are relentless. Scrutiny starts with automated flags from Form 1040 discrepancies, like mismatched W-2s/1099s or unusually high deductions.

Key triggers:

– Math errors or underreporting: DIF (Discriminant Index Function) scores flag outliers.
– High-income earners: Those over $200,000 face more audits.
– Cash-heavy businesses: Restaurants, salons – expect EDD payroll scrutiny.
– Crypto or foreign assets: FBAR/FATCA non-compliance draws global attention.
– Amended returns: Frequent changes raise eyebrows.

In 2024, the IRS audited about 0.4% of individual returns, but that jumps to 2-5% for businesses with $1M+ revenue. State agencies mirror this: FTB targets residency issues for Californians moving out-of-state, while CDTFA hunts sales tax evasion in e-commerce.

My expertise? I’ve defended hundreds of audits. For a Los Angeles restaurateur, FTB claimed $120,000 in unreported sales; we proved it via bank reconciliations, abating all penalties. Authoritative insight: Always keep records for 3-7 years (IRS statute of limitations).

California’s tax trio is tougher than the IRS in some ways. FTB handles income taxes, EDD payroll/unemployment, CDTFA sales/use taxes.

Triggers for state scrutiny:

– FTB: Non-filer alerts, residency audits (e.g., snowbirds claiming Nevada residency while keeping CA ties).
– EDD: Misclassified workers (1099 vs. W-2), underreported wages.
– CDTFA: Unremitted sales tax, especially for online sellers post-Wayfair ruling.

Stats: In 2023, FTB issued over 1 million notices; EDD audited 10,000+ employers. Penalties stack fast – up to 40% for fraud.

As a Los Angeles EA, I’m intimately familiar with CA nuances. I’ve represented tech startups in Silicon Valley (via remote) against CDTFA use tax claims and helped overseas Americans with FTB worldwide income reporting. Trustworthiness shines in testimonials: “Mike saved my business from EDD shutdown,” says a Beverly Hills client.

Prevention beats cure – here’s your roadmap:

1. File accurately and on time: Use e-file; extensions are fine, but pay estimates.
2. Document everything: Receipts, mileage logs, home office setups (post-COVID rules tightened).
3. Understand deductions: No “hobby” losses; substantiate business expenses.
4. Report all income: Including gig work, crypto gains (Form 8949).1.
5. For businesses: Quarterly payroll deposits, proper worker classification (AB5 in CA).
6. Expats: File FBAR if foreign accounts >$10K; claim FEIE wisely.
7. Annual reviews: Engage an EA for tax planning to spot red flags early.

My firm offers bespoke planning. For a Hollywood producer, we restructured deductions to slash audit risk by 80%. SEO bonus: Search “avoid IRS audit Los Angeles” – we’re top-ranked because we deliver.

Let’s break it down with real cases (anonymized):

– Back taxes: A freelancer ignored 1099s; IRS levied bank account. Resolution: Currently Not Collectible status.
– Audit defense: EDD claimed independent contractors were employees. We won via SS-8 determination.
– Liens/levies: FTB lien blocked home sale. Released in 30 days via payment plan.
– Penalties: COVID hardships – abated $45K for a small business.
– OIC successes: Reduced $300K IRS debt to $50K for a retired couple.

With 20+ years, I’ve seen it all. My EA credential means unlimited representation rights – unlike CPAs limited in some states.

Transparency is key – here’s our proven process:

1. Free consultation: Call 1-877-788-2937 or visit mikehabibea.com. We assess via secure portal.
2. Power of Attorney (POA): Form 2848/8821 lets me speak for you.
3. Transcript pull: IRS/FTB records reveal exact issues.
4. Strategy session: OIC? Installment? Appeal?

We halt collections immediately under IRC 6330.

5. Negotiation/representation: I handle all calls, hearings.
6. Resolution & compliance: Plan to prevent recurrence.
7. Follow-up: Annual check-ins.

Timeline: 3-18 months. Success rate: 95%+ for qualified cases. A nationwide client in Texas said, “Mike’s LA firm felt local – virtual magic!”

E-E-A-T in action:

– Expertise: 20+ years in tax representation
– Experience: 2,000+ cases, $50M+ resolved. Nationwide/expats.
– Authoritativeness: Published in Tax Notes; speaker at NAEA conferences.
– Trustworthiness: A+ BBB, 5-star reviews, transparent flat fees.

We’re not a mill – personalized service from my Whittier-area office. Serve all 50 states + overseas.

Absolutely – payroll taxes are EDD/IRS kryptonite. Non-payment triggers personal liability (Trust Fund Recovery Penalty). My wins: Resolved $250K EDD debt for a construction company via installment + abatement. Proactively: Implement payroll service, quarterly reviews.

Expats face double whammy: IRS + host country. Common pitfalls: Unfiled FBARS, Streamlined Filing Compliance. I specialize here – helped 300+ expats. Example: Australian resident settled $90K penalty for $0 via reasonable cause. Use Form 2555 for exclusions.

DIY for simple returns? Sure. But resolution? Risky. IRS wins 80% against unrepresented taxpayers. Hire for: Audits, debts >$10K, business issues. My fee? Often less than tax, and or penalties saved.

Flat fees based on complexity – $2,500-$25,000 typical. Worth it? Clients could save 5-10x in reductions. Free initial eval.

– LA Tech Startup: CDTFA sales tax audit – $150K claim reduced to $12K.
– Expat in Spain: IRS levy lifted; OIC approved.
– Small Business Owner: FTB residency audit – proved non-CA, zero liability.

– Entity choice (LLC vs. S-Corp).
– Retirement contributions.
– Cost segregation for real estate.
– Quarterly estimates.

Annual planning sessions at my firm.

Call 1-877-788-2937, or ONLINE.

Stay organized, honest, and proactive. Partner with an EA like me – your tax shield.