Civil tax matters encompass a broad range of non-criminal disputes and issues related to the payment, reporting, and assessment of taxes owed to federal, state, or local tax authorities. Unlike criminal tax cases, which involve allegations of intentional tax evasion or fraud, civil tax matters typically arise from misunderstandings, errors, or disagreements regarding the interpretation and application of tax laws.

These issues are often challenging to comprehend and require detailed attention and a strategic approach to achieve compliance while safeguarding our clients’ rights and financial interests. At Howard O. Bernstein, P.C., we are dedicated to breaking down these laws and providing robust representation for individuals and businesses. Schedule a consultation at our Boulder, Colorado, office today to learn more.

Civil Tax Challenges in Colorado

Civil tax cases can arise in a variety of situations, impacting both individuals and business entities. These challenges may include, but are not limited to, discrepancies in tax filings, audits initiated by the Internal Revenue Service (IRS) or the Colorado Department of Revenue, disputes over tax assessments, and collection actions.

Our team understands that the stakes are exceptionally high in these matters, as they directly affect personal finances, business operations, long-term financial stability, and legal compliance. The consequences of unresolved civil tax issues can range from significant financial penalties to liens on property and levies on bank accounts.

IRS and Colorado Department of Revenue Audits

Tax audits conducted by the IRS or the Colorado Department of Revenue are reviews of financial records to verify accuracy and ensure compliance with tax laws. These audits can be stressful and difficult to understand, often requiring clear explanations of discrepancies and accurate documentation. Legal assistance is crucial for protecting individual rights, clarifying misunderstandings, and negotiating favorable resolutions while avoiding potential penalties.

Tax Liabilities and Payment Plans

If a taxpayer is unable to meet their full tax obligations, they may experience significant financial stress and risk legal action from tax authorities. Options like Installment Agreements or Offers in Compromise can offer practical, manageable solutions. Legal guidance is critical to successfully negotiating these arrangements, ensure compliance, and prevent complications that could further aggravate the financial burden.

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Penalties and Interest Relief

Unpaid taxes often result in steep penalties and accruing interest, significantly increasing the total amount owed. Taxpayers may be eligible for relief through penalty abatement requests, waiver programs like the First-Time Abate (FTA) policy, or disputing improper penalty assessments.

The IRS First-Time Abate (FTA) policy offers eligible taxpayers a one-time opportunity to remove specific penalties, such as failure-to-file or failure-to-pay penalties. To qualify, taxpayers must have a clean compliance record for the past three tax years and must have filed all required returns or arranged to do so. Legal guidance can be instrumental in assessing FTA eligibility, drafting effective requests, and reducing the financial strain of penalties and interest.

Colorado-Specific Tax Issues

Colorado's tax laws—covering income, sales, use, and property taxes—come with unique rules and requirements that can pose challenges for individuals and businesses. Maintaining compliance with these state-specific regulations often demands a thorough understanding of local tax codes and precedents. Legal expertise is essential for resolving disputes, managing compliance issues, handling administrative appeals, and effectively addressing state-level tax concerns.

Trust Fund Recovery Penalties

The Trust Fund Recovery Penalty (TFRP) is a significant financial penalty levied on business owners, directors, or other responsible individuals when employment taxes—such as Social Security, Medicare, and federal income taxes withheld from employee wages—are not correctly paid to the IRS. These withheld funds are deemed "trust funds" as they are held by the employer on behalf of the federal government.

If these taxes are not paid, the IRS can assess the TFRP against individuals deemed responsible for ensuring the taxes were collected and remitted. Responsibility is determined based on factors such as authority over financial decisions or the ability to pay creditors. Additionally, the IRS must also prove "willfulness," meaning the failure to pay was intentional, reckless, or due to gross negligence. The consequences of the TFRP can be severe, as it allows the IRS to collect unpaid taxes directly from an individual’s personal assets, bypassing the business entirely.

Innocent Spouse Relief

Innocent Spouse Relief is a provision offered by the IRS to protect individuals from being unfairly held responsible for tax understatements caused by their spouse or former spouse on a jointly filed tax return. When filing jointly, both spouses are typically held equally liable for any errors or omissions, regardless of who caused them. However, if one spouse was unaware of the inaccuracies or did not benefit from the understated tax, they may qualify for relief.

To be eligible for Innocent Spouse Relief, individuals must meet specific criteria, such as proving they had no knowledge or reason to know about the incorrect or omitted items at the time the return was signed. This could include unreported income, inflated deductions, or other errors made by their partner.

Additionally, they must demonstrate that it would be unfair to hold them responsible for the resulting tax liability, given circumstances such as financial hardship, abuse, or other inequities. This relief provides an important safeguard for individuals seeking to avoid unjust financial burdens caused by someone else’s actions on a joint tax return.

Disputes Over Tax Liens and Levies

Tax liens and levies are enforcement tools used by the IRS or state tax authorities to collect unpaid taxes, and each has distinct implications.

A tax lien is the government’s legal claim on your property—such as real estate, personal assets, or financial accounts—when you fail to pay your tax debt. While it doesn’t result in immediate property seizure, it acts as a notice to creditors that the government has priority over your assets. A lien can negatively impact your credit score, limit your ability to sell property, and complicate financial transactions like securing loans.

A tax levy, on the other hand, takes enforcement to the next level. Unlike a lien, a levy allows tax authorities to seize your property outright to satisfy the debt. This can include garnishing wages, freezing bank accounts, or even seizing physical assets like your car or home. Levies can leave individuals and businesses in financial turmoil, unable to meet essential expenses.

Disputing tax liens and levies typically involves understanding the scope of the debt, identifying procedural errors, or negotiating with the authority. Legal professionals can help by filing a lien release request, setting up installment payment plans, or appealing the levy through a Collection Due Process hearing. Alternative options like Offers in Compromise or declaring financial hardship are also strategies to mitigate the impact.

A Client-Focused Approach to Civil Tax Matters

At Howard O. Bernstein, P.C., we understand that civil tax issues often cause significant stress, anxiety, and uncertainty. Our Boulder-based team prioritizes clear, consistent communication and close collaboration with each client, ensuring that we develop tailored legal strategies rooted in their specific circumstances and objectives. Our client-centric philosophy is built on several core principles:

Personalized strategy: We recognize that no two tax cases are identical. Your financial situation, business structure, and personal goals are unique, and our strategies reflect that. We avoid one-size-fits-all solutions and craft a customized plan to achieve the best possible outcome for you.

Transparency and education: We believe that an informed client is an empowered client. We take the time to explain complex tax laws and procedures in clear, understandable terms, ensuring you are fully aware of your options, the potential risks, and the likely outcomes at every stage of your case.

Proactive representation: Our approach is not merely reactive; we anticipate potential challenges and address them proactively. By staying ahead of deadlines, preparing comprehensive documentation, and engaging with tax authorities early, we position our clients for success and minimize the risk of escalation.

We pride ourselves on being accessible to our clients. We understand that tax issues can be time-sensitive and stressful, which is why we make sure your calls and emails are returned promptly, and your questions are answered thoroughly. You will work directly with our experienced attorneys, who are dedicated to providing the support you need.

Dependable Civil Tax Law Services in Boulder, Colorado

Whether you are an individual taxpayer, a small business owner, or a corporate entity, Howard O. Bernstein, P.C. is here to help you address your civil tax concerns with the confidence, precision, and dedication necessary to achieve a favorable resolution. We are committed to being your trusted legal partner, handling tax law matters on your behalf so you can move forward with peace of mind. Call our firm today for legal assistance in Boulder, Colorado, and the surrounding areas.