Frequently Asked Questions

Companies can usually apply 6% to 8% of their total yearly qualifying R&D expenses to their federal income tax liability. Companies can also claim up to $250,000 against their payroll taxes each year. New businesses can claim a total of $1.25 million in tax credits against their payroll taxes for five years.

Examples of qualifying research include projects that improve a manufacturing process, develop green initiatives, create new software, build prototypes, or add equipment that streamlines a process. If you have questions about your company’s specific project, please call the team at Moskowitz LLP.

Besides obvious industries like information technology and pharmaceuticals, companies in dozens of other sectors can qualify for the R&D tax credit. Qualifying industries include agriculture, architecture, cannabis, food & beverage, packaging, software development, and wineries & vineyards.

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With millions of tax returns filed every year, the Internal Revenue Service has developed electronic processes to easily identify tax returns with omitted income, mistakes, and intentional tax wrongdoing. This software and statistical approach hunt and identify reporting irregularities, and criminal tax investigations and tax audits follow the leads.

First, consult with a tax attorney to review your return and potential exposure. It is important to first consult with a tax attorney because ONLY with an attorney do you have attorney client privilege. Anyone else you speak to can be compelled to give evidence against you. Once you determine your potential exposure and develop a strategic plan to resolve the tax audit. Further, seeking professional help from a tax attorney will ease your stress knowing that your tax audit will be handled correctly and minimize your risk for tax bills, tax penalties, and tax investigation.

Moskowitz LLP realizes no taxpayer wants to be on the receiving end of an IRS tax audit. Statistics have shown that higher-income individuals are more prone to being audited by the IRS because of the complexity of their returns and likely additional tax penalties and interest to be assessed.

Our lawyers are as aggressive as they can be within the bounds of the law. We want you to maintain your livelihood and personal life while we work to help resolve the tax problem. We know when and how to go over an auditor’s head to obtain a due process hearing or go to Tax Court; we also know when it is in the best interests of our clients to move forward through the tax collection process. For clients that owe money to the tax authorities, we are highly skilled at structuring payments that are minimal and manageable over a period of many years. Remember, our goal is to keep you in the business of living your life.

A criminal tax investigation has the potential to ruin your business, your career, and your personal relationships. Our legal representation generally begins with trying to stop the investigation. If the investigator persists, we do everything in our power to convince the government to drop your case. If the government refuses to drop the case, we use our unique and extensive experience in both tax law and criminal law to provide you with the best possible representation in court – all while preparing for the civil case which is sure to follow.

After over thirty (30) years of tax law practice, Moskowitz LLP knows why people get into tax trouble. The most common reasons:

• Books and Records are a Mess. This is the number one reason people get into tax trouble. Every person has the best of intentions from the beginning, but life responsibilities or failing to understand just how critical it is to have good records (regardless of if you are an employee or self-employed) often leaves books and records a mess, creating confusion and mistakes. This often results in missed tax deductions, and should you get audited, trouble substantiating the tax positions you took on your tax returns.
• I’m too busy. When a person’s life is out of control and too overwhelmed to complete the tax paperwork. Typically, that person believes they will get to it ‘next week’ but never does. Then the problem snowballs and suddenly they are even more overwhelmed. The problem then snowballs until the IRS or State of California (or other taxing entity) catches the problem and contacts them – often with tax liens or bank account levies.
• Life disruption. Life events such as death, illness, cancer, divorce, or disaster derail some people from performing their tax duties and responsibilities.
• Don’t have the money to pay the tax. When people know that they cannot pay the tax, they often simply try to ignore the issue and hope that it goes away.

Unfortunately, the IRS and State taxing agencies will catch on to them within a relatively short amount of time, and then there are penalties and interest tacked on to the balance that they already could not pay.

Misunderstanding the tax laws and taking exemptions, deductions, and credits that they are not qualified to claim. Resulting in a tax investigation, tax audit, tax bill and/or penalties and interest.

For a variety of reasons, many of our clients come to us with little or no business or tax records. We have a proven system that allows us to help you gather information from third party sources, (examples such as the IRS, under the Freedom of Information Act, banks and vendors, etc.) and if your records are hopelessly lost we can help you prepare documents based on reasonable estimates, industry standards, and other methods. If you don’t know where to begin, rest assured that we do. And, we will make it easy for you.