California Tax Attorney — IRS and State Tax Defense for California Residents

Written by Sam Brotman, J.D., LL.M. (Taxation), MBA, CPA — Managing Attorney, Brotman Law  ·  Updated May 2026

Most California residents dealing with a tax dispute face two distinct problems at the same time: a federal issue with the IRS and a California issue with one or more state agencies. The IRS and the FTB do not coordinate their audits, but they share information — which means a federal audit can trigger a state exam and vice versa. Handling both requires someone who knows both systems.

That is what I do. Brotman Law has represented over 400 clients in tax disputes since 2013 — field audits, correspondence exams, criminal investigations, and collections work across the full range of California tax agencies and the IRS. The work I describe on this page is work I handle personally, not farmed out to associates.

California Tax Problems Sam Handles

IRS Audit Defense

An IRS audit is a legal dispute over what you owe, not an accounting exercise. The IRS has field offices in Los Angeles, San Diego, San Francisco, and Sacramento that handle California examinations, but the audit proceeds under federal rules regardless of where you live.

I handle all three types of IRS examination: correspondence audits (handled by mail), office audits (conducted at an IRS campus), and field audits (where an IRS revenue agent comes to your home or business). Field audits are the most serious — they typically involve the largest dollar amounts and carry the highest risk of a fraud referral to IRS Criminal Investigation. For a full breakdown of how the IRS audit process works, see my page on IRS audit defense.

One distinction worth understanding: when an IRS revenue agent identifies what the IRS calls "badges of fraud" during a civil examination, the audit can be referred to CI and effectively become a criminal matter. I represent clients in those situations — known as eggshell audits — and coordinate the civil and criminal defense simultaneously.

IRS Collections: OIC, Installment Agreements, and Lien/Levy Defense

An IRS collections matter begins when the IRS has assessed a balance and is attempting to collect it. The tools available to the IRS include federal tax liens (filed against your property), levies (seizure of wages, bank accounts, or assets), and continuous wage garnishment. The tools available to you include an Offer in Compromise, an installment agreement, Currently Not Collectible status, and in some cases, a Collection Due Process hearing to challenge the collection action itself.

Which option makes sense depends on your Reasonable Collection Potential — the IRS's calculation of what it could collect from you over the remaining life of the statute. I run that analysis before recommending any resolution path. For more detail on federal collections options, see my page on IRS attorney services.

IRS Criminal Investigation (CI) Defense

CI is the only IRS division with law enforcement authority — special agents are armed federal officers, not auditors. If CI has contacted you, if a civil audit has shown warning signs of a criminal referral, or if you have received a grand jury subpoena, the matter is a criminal legal proceeding.

I handle criminal tax defense including CI investigations, DOJ Tax Division matters, Tax Court litigation, and eggshell audit situations. Criminal tax cases require attorney-client privilege protection and criminal procedure expertise that goes well beyond what a CPA or a generalist attorney can provide.

California FTB Audit and Collections Defense

The California Franchise Tax Board administers California's income tax and is one of the most aggressive state tax agencies in the country. FTB audits follow the California Revenue and Taxation Code, not the Internal Revenue Code, and the FTB's statute of limitations, penalty structure, and appeals process differ meaningfully from federal rules.

I handle FTB audit defense across all examination types, including the FTB's residency audits — which challenge whether a taxpayer who left California was still legally a California resident for the years under examination. Residency audits are among the most fact-intensive tax examinations there are. The FTB also runs a partial-year residency program that uses data matching across withholding records, property transactions, and out-of-state filings to identify potential California taxpayers. I handle FTB collections work as well, including protest hearings, the Office of Tax Appeals, and abatement requests for penalties assessed under California law.

EDD Payroll Tax Audits

The California Employment Development Department audits employers and independent contractors to verify that payroll taxes and unemployment insurance contributions were properly remitted. EDD examinations frequently turn on whether a worker was correctly classified as an employee or an independent contractor — a question governed by California's AB 5 framework and the common-law control test.

Misclassification findings can result in substantial back taxes, penalties, and interest. In the most serious situations, EDD assessments can follow business owners personally through successor liability rules. I handle EDD payroll tax examinations, protests, and appeals, as well as pre-audit worker classification reviews for businesses that want to identify exposure before the EDD does.

CDTFA Sales Tax Defense

The California Department of Tax and Fee Administration administers California's sales and use tax and a range of excise taxes on fuel, cannabis, tobacco, and other products. CDTFA audits are typically triggered by discrepancies between reported gross receipts and third-party data — bank records, shipping manifests, or industry averages. The CDTFA uses statistical sampling in many audits, which means a finding in one period is projected across all open periods, often multiplying the liability significantly.

I handle CDTFA sales tax audits, redeterminations, petitions for rehearing, and appeals to the Office of Tax Appeals. For businesses facing a large projected assessment based on a statistical sample, challenging the sampling methodology is often the most effective way to reduce the liability.

FBAR, FATCA, and International Tax

California residents with foreign financial accounts or overseas income face both federal and California disclosure obligations. At the federal level, the FBAR (FinCEN Form 114) is required for any U.S. person with an aggregate financial interest in foreign accounts exceeding $10,000. Willful failure to file carries penalties of up to the greater of $100,000 or 50% of the account balance per violation. FATCA (IRC §§ 1471–1474) adds a parallel reporting obligation on Form 8938 for specified foreign financial assets.

California conforms to federal international tax rules but taxes California residents on worldwide income regardless of where the income was earned. I handle FBAR civil penalty defense, offshore voluntary disclosure evaluation, and California-side compliance for clients with international tax exposure.

ERC Audits

The IRS has opened a large volume of Employee Retention Credit examinations targeting claims filed during 2020 through 2023. Many of these claims were filed by third-party promoters using aggressive eligibility determinations that the IRS now disputes. ERC audits tend to move quickly — the IRS has set aggressive examination timelines — and the disallowance of a claim triggers repayment obligations plus penalties and interest.

I represent businesses in ERC audits, including situations where a promoter filed the claim without adequate documentation. If you received an IRS notice questioning an ERC claim, I can review the original eligibility analysis and assess the defensibility of the position before the audit advances.

The CPA-Attorney Advantage

Most tax disputes involve a legal question and an accounting question at the same time — and the way you answer the accounting question can affect the legal outcome in ways that matter.

I am both a California-licensed attorney and a Certified Public Accountant. That combination is relevant in a few specific ways.

First, attorney-client privilege. Communications between a client and their attorney are protected from compelled disclosure in a way that communications with a CPA are not. The federally authorized accountant-client privilege under IRC § 7525 applies only in civil non-criminal tax proceedings and only with respect to tax advice — it does not apply in criminal investigations, grand jury proceedings, or before state tax agencies. When a matter has any criminal dimension, privilege protection matters, and that protection requires an attorney, not a CPA.

Second, Kovel arrangements. Under United States v. Kovel, 296 F.2d 918 (2d Cir. 1961), an accountant retained by defense counsel to assist in providing legal advice is generally protected by the attorney-client privilege. When I represent a client in a criminal tax matter, I can bring in accounting expertise under a Kovel arrangement that keeps the work product privileged. A CPA working directly for the client cannot do the same thing.

Third, Tax Court. The United States Tax Court is the primary forum for contesting an IRS deficiency notice. A CPA can represent a client in Tax Court only if they have passed the Tax Court non-attorney admission exam. An attorney admitted to the Tax Court bar can appear as a matter of right. I am admitted to the Tax Court bar and handle Tax Court cases — from petition through trial if necessary.

What this means practically: I can analyze the numbers the way an accountant would — understand the books, identify the issues, evaluate the math — and then handle the legal dispute on the other side without handing off the file. That matters in audits where the accounting and the legal position have to be consistent, and it matters in collections work where the financial analysis drives the legal strategy.

California Tax Authority Overview

California has three major state tax agencies alongside the IRS, each with a distinct mandate, examination process, and appeals path. Understanding which agency is involved — and how its procedures differ from the others — is the starting point for any California tax dispute.

The IRS — Federal Tax

The IRS administers the Internal Revenue Code. For California matters, it operates field offices in Los Angeles (Laguna Niguel and downtown), San Diego, San Francisco, and Sacramento. Most IRS field audits of California residents are assigned to the revenue agent group closest to the taxpayer's location. IRS appeals are handled by the IRS Independent Office of Appeals, which operates separately from the examination function.

Franchise Tax Board (FTB) — California Income Tax

The FTB administers California's Personal Income Tax Law (Revenue and Taxation Code §§ 17001 et seq.) and Corporation Tax Law (R&TC §§ 23001 et seq.). The FTB is headquartered in Sacramento and conducts examinations statewide. Its statute of limitations is four years from the later of the return due date or filing date — one year longer than the IRS's standard three-year period. The FTB's protest and appeal process runs through the FTB's internal protest unit and then to the California Office of Tax Appeals, which was established in 2017 as an independent hearing body separate from the FTB.

Employment Development Department (EDD) — Payroll Tax

The EDD administers California's payroll tax program, which encompasses unemployment insurance (UI), state disability insurance (SDI), and employment training tax (ETT). EDD field audits are conducted by audit teams organized by region. The EDD's assessment process includes a Notice of Assessment, a petition for reassessment (which must be filed within 30 days), and an appeal to the California Unemployment Insurance Appeals Board.

California Department of Tax and Fee Administration (CDTFA) — Sales and Use Tax

The CDTFA was created in 2017 when it assumed the sales tax functions of the former Board of Equalization. It administers California's sales and use tax, as well as excise taxes on motor fuel, cannabis, tobacco, alcohol, and other products. CDTFA audit findings result in a Notice of Determination, which the taxpayer can contest through a petition for redetermination. Appeals from CDTFA determinations go to the California Office of Tax Appeals.

Sam's California Practice Areas by City

I represent clients throughout California. Most of my work is done remotely — IRS and state tax proceedings do not require in-person attendance at every stage — so geography is not a constraint for most matters. That said, here is where my California practice concentrates.

San Diego is where Brotman Law is based. My San Diego office handles IRS and California state tax matters for individuals and businesses across San Diego County, including Carlsbad, Chula Vista, El Cajon, Encinitas, Escondido, La Jolla, National City, and Oceanside.

Los Angeles generates a significant share of my California caseload — field audits assigned to the IRS's Los Angeles field offices, FTB examinations, and CDTFA matters for businesses in the greater LA area. I represent clients across Los Angeles County, Orange County, and the Inland Empire.

San Francisco and the Bay Area produce a particular volume of international tax and ERC matters, given the concentration of technology companies, venture-backed businesses, and executives with equity compensation and foreign financial accounts. I handle those matters for clients in San Francisco, Oakland, San Jose, and the broader Bay Area.

Sacramento matters are notable because it is where both the FTB and the CDTFA are headquartered. Clients in the Sacramento region who are dealing with a California state tax matter are dealing with agencies that have staff and decision-makers in their own backyard. I handle FTB and CDTFA matters for Sacramento-area clients including protest hearings and Office of Tax Appeals proceedings.

I also regularly represent clients in Irvine, Santa Barbara, Bakersfield, Fresno, and other California markets. If you are somewhere in California and looking for a California tax attorney, the relevant question is not where I am located — it is whether I know the agency and the law. I do.