Tax Attorney in Kentucky

Yes. Kentucky imposes a flat individual income tax of 3.5% for 2026, reduced from 4.0% in 2024 under the rate-reduction trigger mechanism written into KRS Chapter 141. Corporate income tax is a flat 5.0%. Kentucky also imposes the Limited Liability Entity Tax (LLET) on LLCs and S-Corps under KRS §141.0401 — a $175 minimum, gross-receipts-based tax that runs alongside federal pass-through reporting. Returns are filed on Form 740 for individuals and Form 720 for corporations.

The U.S. Tax Court holds Kentucky trial sessions in Louisville at the Gene Snyder Federal Building, 601 West Broadway, Room 440. Louisville is the only in-state designated place of trial; petitioners from Lexington, Bowling Green, Owensboro, and elsewhere in Kentucky calendar to Louisville unless they designate an out-of-state location closer to home (Cincinnati for Northern Kentucky filers, for example, or Nashville for some Western Kentucky filers). The petitioner designates the place of trial on the petition under Tax Court Rule 140.

Under KRS §141.235, the Kentucky DOR generally has four years from the later of the return due date or the date filed to assess additional income tax. The period extends to six years where there is a substantial omission of gross income (more than 25% of gross income reported), and there is no SOL on assessment for unfiled returns or fraudulent returns. The federal IRS Collection Statute Expiration Date (10 years from assessment under IRC §6502) runs independently from the state SOL on assessment.

Yes. The IRS examines federal income tax, federal employment tax, and federal excise tax. The Kentucky DOR examines state income tax, sales-and-use tax, withholding, LLET, and other state-administered taxes. A federal RAR (Revenue Agent’s Report) adjustment must be reported to Kentucky DOR within 180 days under KRS §141.235(2) — failure to do so extends the state SOL indefinitely. The two agencies exchange information under information-sharing agreements, and a federal adjustment commonly triggers a state assessment for the same year.

Yes. Kentucky runs an “Offer in Settlement” program administered by the DOR Division of Collections. It functions like the federal IRC §7122 OIC: the taxpayer submits financial disclosure, the DOR evaluates collectibility, and the agency may accept less than the full balance where doubt as to collectibility or liability exists. Information is published on the Kentucky DOR Offer in Settlement page. The DOR Division of Collections can be reached at 502-564-4921.

The Limited Liability Entity Tax (LLET) under KRS §141.0401 is a gross-receipts-based Kentucky tax imposed on most LLCs, LLPs, S-Corps, and limited partnerships doing business in Kentucky — even those that pass through federally and pay no entity-level federal income tax. The tax is the greater of (a) $0.095 per $100 of Kentucky gross receipts (or alternatively a small-business-receipts calculation) or (b) the $175 statutory minimum. It is filed alongside Form 725 (LLC) or Form 720S (S-Corp) and is owed by the entity, not the individual members. Founders who form a single-member LLC for federal tax purposes are often surprised by the $175 annual floor.

Your CSED is calculated from the date of assessment, which appears on your IRS Account Transcript as Transaction Code 150 (return filed) or Transaction Code 290 (additional assessment). Add ten years, then add the days for any tolling events: pending OICs, CDP hearings, bankruptcy stays, and so on. The IRS publishes the CSED date internally on its CC ACTRA transcript; we pull this for clients as part of every engagement. The practical impact is significant — a debt assessed in 2016 may be approaching expiration in 2026, and intensified enforcement near the CSED is common.

Probably yes for the federal trust-fund portion. IRC §6672 assesses a Trust Fund Recovery Penalty against any “responsible person” who “willfully” failed to pay over withheld taxes — the FICA and federal income-tax withholding portion of Form 941, not the employer’s share. The IRS conducts a Form 4180 interview to identify responsible persons. Anyone with check-signing authority, payroll-decision authority, or knowledge of the unpaid taxes can be assessed. On the state side, Kentucky DOR pursues analogous responsible-person liability for unpaid state withholding under KRS §141.330. LLET arrears stay with the entity but the DOR can lien personal assets of managers in some fact patterns.

Yes. IRC §7345 authorizes the IRS to certify “seriously delinquent” tax debt — currently $62,000 for 2026, indexed for inflation — to the State Department, which may then deny passport renewal or revoke an active passport. The certification reverses when the debt is paid, an IA is in place, an accepted OIC is in force, an active CDP hearing is pending, or Innocent Spouse Relief is in process. For Kentucky distillery executives traveling overseas, Toyota Motor Manufacturing Kentucky personnel attending corporate functions abroad, and University of Kentucky / University of Louisville faculty with international engagements, decertification is often urgent and can be processed in 30 days or less.

Federal tax-resolution fees vary by matter complexity. A straightforward Installment Agreement typically falls between $1,500 and $3,500. A full Offer in Compromise with Form 433 financial analysis runs $4,000 to $7,500. Audit defense depends on the audit type and the number of issues. A U.S. Tax Court petition with case workup and trial preparation generally starts at $6,000 and rises with complexity. VTL provides a written fee quote after the free consultation. Cal Bar Rule 7.1 prohibits comparisons claiming we are cheaper or faster than competitors without verifiable substantiation, so we do not market on price.

Yes. Communications between you and a licensed attorney for the purpose of seeking legal advice are protected by federal common-law attorney-client privilege, subject to the usual exceptions (crime-fraud, waiver, etc.). The narrower federally-authorized tax practitioner privilege under IRC §7525 applies to non-attorney CPAs and EAs but does not extend to criminal-tax matters. An attorney handling your tax case retains the broader privilege that survives criminal investigation.

A Tax Court trial is a bench trial — no jury — before a Judge or Special Trial Judge of the U.S. Tax Court. The Louisville session opens with calendar call at the Gene Snyder Federal Building, where the Court hears scheduling issues. Most cases on the calendar settle before trial; the IRS Office of Chief Counsel attorney for the case meets with petitioner’s counsel during the days before trial. If trial proceeds, the petitioner bears the burden of proof on most issues, presents evidence and witness testimony, and the Court issues a written opinion typically within several months of trial. Small-tax-case procedure under IRC §7463 applies to deficiencies of $50,000 or less per year and uses a simplified evidentiary standard.

Yes, generally. IRC §6331(k)(1) suspends levy action while an offer is pending and for 30 days after a rejection, and during any timely-filed Appeals review of a rejection. The IRS will not levy on you while a processable OIC is being evaluated. However, the IRS may still file a Notice of Federal Tax Lien during the OIC pendency to protect its position. CSED is also tolled during the pendency. A poorly-prepared OIC that gets returned (not rejected) does not provide the same protection — processability matters.

For the protest phase at the Kentucky DOR and proceedings before the Kentucky Board of Tax Appeals, taxpayers may represent themselves or be represented by an attorney, a CPA, or another authorized representative under DOR rules. For judicial review proceeding in Franklin Circuit Court (or in some cases the taxpayer’s home county circuit court), an attorney admitted in Kentucky is required. VTL handles the federal side of overlapping matters and coordinates with Kentucky counsel where state-court litigation is necessary. Many DOR disputes resolve at the conference stage or on Board protest without ever reaching state court.

Kentucky and Ohio have a reciprocal agreement: Kentucky residents who work in Ohio file as Kentucky residents and pay Kentucky income tax on the wages; Ohio does not impose Ohio state income tax on the Kentucky resident’s W-2 wages. However, Ohio local income taxes (Cincinnati, Norwood, Reading, etc.) are not covered by the reciprocity — the Northern Kentucky commuter typically pays the Ohio city tax via employer withholding, and Kenton/Boone/Campbell county occupational license fees still apply where applicable. CP2000 underreporter notices commonly stem from a mismatch in how reciprocal wages are reported. We handle the federal cleanup; for the local-tax piece, we coordinate with Kentucky and Ohio counsel as needed.