As one of Colorado's preeminent law firms, our talented lawyers help resolve many types of business problems. These problems appear in many different areas, from employment to finance to taxation.
Recently our tax attorneys have been busy helping some business owners navigate through difficult tax challenges that could have sunk any successful enterprise. As the old saying goes, "Every ship has a good captain in calm seas." But some tax challenges call for the very best in tax lawyering and crisis management. Superior "captaining" skills are needed to steer businesses through troubled tax waters.
Our tax lawyers represent clients in all types of tax cases, including income tax, corporate tax, partnership and estate and gift tax. But lately our lawyers have seen many wage-withholding disputes.
Wage-withholding issues can create some of the most serious tax challenges, particularly those issues involving employee withholding payments that never make it into the U.S. Treasury. Since World War II, our wage-withholding tax system has supplied the federal treasury with a steady source of tax revenues. The federal government is serious about protecting this revenue stream.
The IRS protects this system with vigor and shores up its enforcement powers with penalty provisions. Tax penalties are stiff and personal and were designed to protect the government's financial "lifeblood."
Given this important fiscal interest in collecting withholdings, the IRS can assess overdue withholding taxes and penalties after an interview and a short appeal period. Successful representation demands quick and thoughtful responses that bring all the possible defenses to the surface as quickly as possible. Possible defenses include the lack of control and knowledge of the diversion, lack of willfulness, and reasonable cause.
Our Tax Group recently represented a very successful medical practice that was deeply entangled in the tax system. The doctors owning this practice discovered that their financial manager had diverted hundreds of thousands of withholding dollars into his own personal bank accounts. The manager disguised this diversion with financial reports and misrouting of IRS deficiency notices.
When the scheme finally surfaced, the hardworking health care providers were shocked to discover their personal liability for the diverted funds. By this time, the IRS was well on its way to collecting both withholding tax and penalties. Through talented negotiation and expertise, our tax attorneys obtained: (1) releases of personal liability; (2) a workable installment plan; and (3) a cancellation of all penalties against the medical practice and the health care professionals. Needless to say, our clients were relieved.
Though each tax case is unique and fraught with its own challenges, our tax attorneys can help clients navigate through sometimes murky and dangerous waters. We handle all types of tax cases, including federal income tax, federal estate and gift, and state and local tax cases.
Jim Walker is Rothgerber Johnson & Lyons' senior tax partner. His practice focuses on providing clients with expert and innovative tax advice. He also regularly represents taxpayers before federal and state administrative agencies, including the Department of Justice and the Colorado Department of Revenue. Mr. Walker is a fellow of the American College of Tax Counsel and the American College of Trust and Estate Counsel.
This article is a publication of Rothgerber Johnson & Lyons LLP and should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult an attorney concerning your own situation and any specific questions you may have.
©2001 Rothgerber Johnson & Lyons LLP
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