A little secret: tax authorities (the Internal Revenue Service, Department of Revenue Services, etc.) do not always agree with or accept our clients’ tax positions. In a vastly complex area, it is not our role to balance the budget by asking our clients to pay more tax than they should. We are students of the tax law and scholars in its nuances. While as a firm we are not naturally contentious, the reality is that we sometimes deal with tax authorities in adversarial situations. It comes with the territory and we navigate this turf carefully every day.
We handle all aspects of tax controversies up to litigation. Even in litigation we are often the liaison with litigators and either fact or expert witnesses. Several of our tax personnel are also lawyers, but do not practice as such.
The fact is that tax authorities audit where the money is. Recently the IRS has become more aggressive in their enforcement actions. They are currently examining 4% of tax returns listing incomes of over $200,000 and 12.5% of returns showing incomes of $1 million or more. In our current climate, IRS exams are now more common, more complicated, and take more time to resolve.