THEVOZ Attorneys will be your advocate in any type of tax dispute with tax authorities.
THEVOZ Attorneys is an international tax law firm with offices in Austin Texas and Switzerland. Our clients range from large corporations to private citizens, The client issues we work with can be anything from representing someone in an IRS tax audit; get compliant on taxes that may be in arrears; advising a company starting a new venture in a foreign country; or representing a company in a cross-border tax dispute. We provide excellent business advice, but if there is a conflict involving our client and a government taxing authority, the client needs the protection of an advocate that knows the issues and does not back down.
Tax dispute resolution and representation are an important part of our client services. These can include:
Federal tax controversy. A tax controversy is the formal name of a dispute between the IRS and an individual taxpayer or company. The IRS routinely selects taxpayers at random to audit their tax returns as a tax enforcement tool. If the IRS wishes to adjust in the randomly selected audited tax return or other tax return, they will issue a “notice of deficiency,” also called a “90-day letter,” to a company or individual detailing the adjustments the agency requires on the tax return. If the taxpayer agrees with the adjustment, they do not need to respond to the letter but simply pay the amount required by the IRS. If they do not agree, the taxpayer and the tax authority have a tax controversy and dispute process begins.
US Tax Court is not a judicial body but was created specifically to hear income tax disputes. The rules of evidence as defined in jurisprudence do not apply in US Tax Court. However, an attorney who has been admitted to the bar of Tax Court can represent the taxpayer in front of the Court.
Small Tax Cases, for disputed amounts of $50,000 or less, are heard in a less formal proceeding. About 90 percent of Small Tax Cases are settled out of court by agreement of the taxpayer and the IRS, a good reason to engage an attorney even though the amount of money in dispute may not be very large. The taxpayer may call witnesses, but the typical Small Tax Case involves disputed records like receipts and business records so the most relevant witness may be a bookkeeper or accountant who can verify records. The court can accept or challenge taxpayer records. The court issues a summary opinion that cannot be appealed.
Larger tax controversies are heard in Regular Tax Court. These cases effectively require an attorney’s representation because both sides, the IRS and the taxpayer submit formal legal arguments in a brief that must meet the technical requirements of the US Tax Court. Many larger cases bypass Tax Court and go straight to Federal District Court on the advice of the petitioner’s attorney. As with Small Tax Cases, many of these larger cases are settled out of court, with the process of drafting the opposing briefs becoming the impetus and basis for a complex negotiation process between the taxing authority and the taxpayer. If the case is not settled and is decided in US Tax Court or Federal District Court, the decision can be appealed.
Transfer Pricing Ruling. Transfer pricing is an important issue right now because the of OEDC’s anti-base erosion and profit shifting initiative. The initiative has highlighted the ways multinational enterprises (MNEs) can reduce their tax liability by making it appear as if high value-added activities are performed, and taxed, in low tax countries. Transfer pricing is one of the practices cited by the OEDC as a method of tax avoidance used by MNEs. Multinationals have entities in multiple countries that produce goods used as commodities or components of products finished by other entities. The MNEs, when they ship the commodities or components across border to other entities in the group, are supposed to price those goods as if they were purchased from entities outside the group, as if it were an “arm’s-length” transaction. By manipulating pricing data so that it appears the activity with the highest added value occurred in a country with low tax rates, MNEs effectively shift profits and avoid taxes away from countries with relatively high tax rates.
However, increased enforcement aimed at curbing transfer pricing abuse has many MNEs concerned that they will find themselves being double taxed by authorities in the countries in which they operate. Defending themselves in a climate of suspicion and mistrust is problematic. What can MNEs do to protect themselves from being unfairly accused of tax avoidance?
THEVOZ Attorneys works with client MNEs to develop a Transfer Pricing Ruling. We develop pricing rules to fairly capture the relative added value of each step of the production process, for each product and/or service, then we prepare a document with these rules for every product and/or service sold by the MNE. We sit down with the taxing authority of each country in which the MNE operates and negotiate an agreement for each transfer pricing rule in the document. Once agreed to by all of the relevant countries, this Transfer Pricing Ruling becomes the basis of a defense for any accusation of tax avoidance through transfer pricing. If the MNE is double taxed, we will represent them in front of taxing authorities and argue their case. We will also review the Transfer Pricing Ruling periodically to make changes due to new technology, distribution channels, marketing initiatives or any new business practice that effects the MNE’s offerings.
Getting compliant on your taxes. US citizens, permanent residents (green card holders), and people with a substantial presence in the US, defined as having lived in the US more than 183 days in the past calendar year, must pay US taxes on all income, even income earned overseas. For those taxpayers who did not pay taxes just as an oversight and who want to rectify the situation with the IRS, there is the streamlined offshore procedure to get compliant on all taxes owed. While the streamlined procedure requires substantial amounts of paperwork, doing it correctly will mean the taxpayer is not required to pay penalties for failure to file and failure to pay penalties, as well as other liabilities for accuracy. THEVOZ Attorneys can help you gather together all the required paperwork, including proper tax returns for a period of time specified by the IRS, review that information for accuracy and properly fill out important forms like FBAR and Form 8938. We understand how to deal with the IRS and we will not be intimidated. But we will be thorough.
For US persons for tax purposes who are deemed willfully non-compliant, but who wish to settle their debt with the IRS and possibly avoid criminal penalties, there is the offshore voluntary disclosure program. This program requires pre-clearance by the IRS. It also requires timely disclosure of all tax liabilities. The program is rigorous and exacting, and surely requires the services of a capable tax attorney like THEVOZ Attorneys, but the benefits of meeting the IRS’s standards can include being absolved of any civil fraud conviction and penalties, as long as the taxpayer makes a complete disclosure and pays all taxes due promptly.
These dispute resolution services are just some of the ways THEVOZ Attorneys can help taxpayers stay on the right side of the law and the IRS. We can help you with any taxes from offshore businesses and help rationalize tax picture of a company or individual. We can get you out of trouble and keep you out of trouble with tax authorities in the US and Europe.