San Francisco Tax Litigation Attorney

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The Tax Law Offices of David W. Klasing

Most taxpayers are inclined to shy away from tax litigation, which involves taking the IRS to court as a dispute resolution. While it is true that litigation is not an appropriate strategy for every situation, there are likewise some cases in which suing the IRS offers the taxpayer the only viable option for successfully reducing a tax bill that is patently unfair as it is based on a government error or errors over the facts or the law underlying an audit and often cannot otherwise feasibly be paid. However, this complex process must be calibrated with extreme care and precision to ensure that necessary legal rights are maintained and that the case is prosecuted in the most efficacious and productive manner possible. Our office can accurately predict if the cost of litigation will be profitably covered by the ground gained in reducing the tax, penalties and interest in the appeals settlement process that follows the filing of the tax court petition before having to make an appearance in tax court.

We pride ourselves on our extensive experience and proven track record handling various tax-related cases. With a long history of advising and representing clients in tax audits and disputes before the IRS, California tax agencies and appeal divisions, and the courts, our team has developed a wealth of expertise in various tax matters. Our cases encompass complex disputes relating to:

Partnership taxation;
Report of Foreign Bank and Financial Accounts (FBAR);
Foreign Account Tax Compliance Act (FATCA);
International tax issues,
Collection due process disputes;
Penalty and interest issues; and the intricacies of
S & C Corporations.

Additionally, our dual-liscensed Tax Litigation and Appeals Attorneys and CPAs have a strong background in handling civil and criminal tax disputes, ensuring our clients receive comprehensive legal representation tailored to their unique needs. By choosing us, you can rest assured that our knowledgeable and dedicated team will work diligently to resolve your tax issues, safeguard your rights, and minimize your financial exposure, regardless of the complexity of your case.

At the Tax Law Office of David W. Klasing, our San Francisco tax lawyers have over 20 years of combined experience in litigating cases for taxpayers throughout the United States, including business entities and U.S. taxpayers residing abroad. Throughout that time, our tax litigation attorneys have repeatedly achieved favorable outcomes for our clients. Our aggressive taxpayer advocates will fight to preserve your constitutional rights, reduce or eliminate the penalties you face, and resolve your tax dispute. Additionally, if we determine that litigation will not likely yield favorable results in your case, we will assist you with alternative dispute resolution methods, such as IRS appeals, mediation, or collections representation, to better serve you or your business.

The Tax Law Offices of David W. Klasing have consistently been ranked as one of the top tax law firms in the nation. Our dual licensed Attorneys and CPAs are recognized leaders and authorities in the field, as evidenced by numerous rankings, awards, media mentions, and leadership positions. David W. Klasing is an Attorney, CPA with a Master’s in tax, a Past Chair of the OCBA Tax Committee, Past Chair of the California Bar Tax Procedure and Litigation Committee, and Past Education Chair of the American Society of Attorney CPAs. With a long history of wins for clients, an ethical and honest approach, and a flawless track record, you can trust that we will provide you with the highest level of representation and guidance throughout your tax litigation & appeals process under his leadership.

Steps to Filing a Lawsuit Against the IRS in Tax Court

Before filing a lawsuit against the IRS in tax court, taxpayers must explore pre-trial negotiations and settlement options. These discussions may enable taxpayers to resolve with the IRS without resorting to a lengthy and costly trial. The IRS has a 98% settlement rate, indicating they are often willing to resolve disputes without litigation. It is worth noting that the IRS possesses the authority to settle cases at any stage during the litigation process, and settlement negotiations can continue after a tax court petition has been filed.

The high settlement rate demonstrates that the IRS and taxpayers generally prefer avoiding litigation whenever possible. Litigation can be time-consuming, expensive, and stressful for all parties involved. By seeking professional guidance and engaging in open communication with the IRS, taxpayers can save valuable time and resources while achieving a favorable result. However, if pre-trial negotiations and settlement efforts prove unsuccessful, taxpayers can file a lawsuit in tax court, armed with a better understanding of their case and a well-prepared strategy.

You may not file suit against the IRS until you have received an IRS “notice of deficiency,” also referred to as a “letter of deficiency” or “90-day letter.” The reason is that once you have received a notice of deficiency, the United States Tax Court has jurisdiction over your case. The IRS ordinarily issues a notice of deficiency after an unagreed audit, where they believe a taxpayer has underreported income, overclaimed deductions, or claimed credits they were not entitled too.

The latter nickname arises from the notice – which outlines any additional taxes, interest, or civil penalties the IRS has determined are due upon the conclusion of a tax audit – that grants the recipient 90 days to file a petition in the U.S. Tax Court. If the taxpayer fails to do so within the allotted timeframe, the debt will become valid and enforceable once the 90-day period elapses – even if the IRS made errors in calculating the taxpayer’s liabilities. However, there is an exception for taxpayers who receive deficiency letters while living outside the United States. Such taxpayers have 150 days, rather than the standard 90, to file their petitions.

Once your petition has been timely filed, the IRS will have an opportunity to respond by filing what is known as an “answer” to your petition. The IRS’ answer must be filed within either 45 or 60 days after the petition, depending on the circumstances. In its answer, the IRS will systematically address each statement made in your petition (unless the answer claims that the IRS lacks knowledge or information about your tax issue, which is tantamount to denying the reports you asserted in your petition). Generally speaking, the taxpayer need not file a reply to the answer unless the IRS specifically files a “motion,” or formal request, asking the taxpayer to admit to whichever statements the IRS has asserted. If this occurs, the taxpayer will have an additional 45-day window to reply.

Technically speaking, a taxpayer may attempt to manage these tasks without representation, known as pro se (“for oneself”) representation. However, this is highly inadvisable due to the immense legal and technical complexity of the disputed facts, laws, and procedures. When they are facing down the IRS’ high-powered, sophisticated network of investigators, attorneys, and technological resources for gathering and analyzing evidence, a taxpayer should not enter the ring alone.

Furthermore, relying on a CPA, EA, or CTEC-certified preparer to handle your appeal is not recommended, as filing the tax court petition would constitute the unauthorized practice of law. These professionals are not trained in persuasion, evidence, and tax procedure and are not equipped to handle any criminal tax issues that may arise during the litigation process. Additionally, these professionals have no attorney-client privilege, and they could become the government’s first witness against you. This attorney client and work product privilege allows clients to be candid with their attorneys and ensures that their communications remain confidential. By working with our qualified dual licensed San Francisco Tax Litigation and Appeal Attorneys & CPAs, you can rest assured that our communications will remain privileged and protected. We aim to represent your tax litigation case effectively, ensuring your legal rights and interests are fully protected.

In conclusion, addressing a notice of deficiency and filing a petition in Tax Court can be complex and daunting. However, by considering pre-trial negotiations and settlements, taxpayers can save time, money, and stress. With a 98% out-of-court settlement rate, the IRS has demonstrated a preference for resolving disputes without litigation. At the Tax Law Offices of David W. Klasing, our experienced team has successfully navigated this process for numerous clients, helping them respond to notices of deficiency and file tax court petitions when necessary.

If you believe the IRS has made an error regarding the facts or the law in your notice of deficiency, filing a tax court petition with our assistance can offer a 90% chance of bettering your situation. Our expertise ensures that any reductions in tax, penalties, and interest will substantially exceed the cost of litigation, especially when we believe the law and the facts are on your side from the outset. We are committed to pursuing justice for our clients through appeals and negotiations with the Chief Counsel’s Office on the courthouse steps if need be.

Our office has never had to step foot in tax court, sparing our clients the most expensive part of litigation. Trust in our expertise to guide you through addressing a notice of deficiency and, if necessary, filing a tax court petition to achieve the best possible resolution for your tax dispute.

Refund Claims vs. Deficiency Suits Against the IRS

Be advised that the above process applies specifically to lawsuits involving notices of deficiency, aptly called “deficiency suits” or “deficiency actions.” Though less common than deficiency suits, in which taxpayers dispute the tax assessments, penalties, and interest charges arising from IRS tax audits, some taxpayers instead file “refund actions.” These two types of tax issues are likely to be litigated successfully.

In contrast to a deficiency suit, the purpose of a refund claim is to recover an improper tax payment that has already been made to the IRS. To bring a refund action successfully, the taxpayer must meet the following standards:

First, the taxpayer must have paid an alleged tax debt in full.
Next, the taxpayer must attempt to resolve the issue through every available administrative channel. This may involve filing Form 1040X (Amended U.S. Individual Income Tax Return) or Form 1120X (Amended U.S. Corporation Income Tax Return), as appropriate.
Finally, the taxpayer must wait six months to elapse before initiating litigation. The six-month clock begins counting down from either (1) the date the original refund claim was filed or (2) the date the taxpayer received a notice of disallowance from the IRS.

At this point, you are likely wondering about the probable fate of cases like yours. Much like criminal cases and personal injury cases, the vast majority of Tax Court cases are resolved via settlement well before the trial stage – which occurs late in the legal process, after the procedures mentioned above and an information-gathering stage called “discovery” – is ever reached. Statistically speaking, approximately 98% of cases are settled before trial, without actually going to Tax Court. Settlement negotiations with taxpayers are handled by the Appeals Division of the IRS, to which taxpayers’ cases are generally referred once the IRS has filed an answer in response to the taxpayer’s petition.

The usual appeals process, initiated by filing a tax court petition, involves an independent review of the taxpayer’s case by an appeals officer not involved in the initial audit. Notably, the IRS auditor and their manager are not directly involved in the appeals process. The appeals officer’s role is to independently consider the taxpayer’s arguments and supporting evidence, striving to reach a resolution that considers the litigation hazards to the IRS, given the specific facts of the client’s case. This process is distinct from the expedited appeals process, which typically involves the auditor, their manager, and an appeals officer. The expedited appeals process may be less effective in resolving disputes. The auditor and manager may be emotionally invested in the audit results, leading to a potentially biased outcome. It can often feel like a three-against-one situation.

If the appeals process does not result in a resolution, the taxpayer has a second opportunity to settel with the IRS Chief Counsel’s office on the tax court steps. This additional layer of review serves as another chance for the taxpayer and the IRS to agree and avoid litigation in tax court. At the Tax Law Offices of David W. Klasing, our experienced dual-licensed Tax Litigation and Appeals Attorneys and CPAs offer invaluable assistance during the appeals process by providing in-depth knowledge of tax laws, regulations, and IRS procedures. We meticulously analyze each client’s case, identifying the most substantial arguments and supporting evidence to present a persuasive case during negotiations with the IRS Appeals Division and the Chief Counsel’s office.

Our tailored approach involves conducting thorough research on relevant legal precedents and case law, which can bolster the taxpayer’s position and provide compelling arguments during negotiations. Additionally, we assist clients in gathering and organizing essential documentation to substantiate their claims, ensuring that their case is presented most effectively. By engaging in clear and persuasive communication with the appeals officer and the Chief Counsel’s office, we strive to demonstrate the merits of our client’s case and the potential hazards of litigation for the IRS, ultimately aiming to achieve a favorable resolution without the need for actual in court tax litigation.

In the rare instance where appeals cannot resolve the issue, litigation may be the only effective means of resolution. However, as we noted in our article discussing the audit and litigation cycle, our aggressive tax litigation Attorneys and CPAs have a total success rate in resolving disputes at appeals, meaning we have never needed to bring a client’s case to Tax Court but are ready willing, and able to do so.

At the offices of David W Klasing, we stand ready, willing, and able to defend our clients through litigation when necessary. As part of our commitment to serving our clients, we help resolve administrative and litigation disputes. When tax litigation is in your best interest, we become forceful advocates and will vigorously defend your case. Our team boasts first-hand experience with tax litigation cases, having been associated with the top international tax defense law firm of Marc Schwartz. This invaluable background, coupled with our extensive knowledge and expertise, allows us to provide exceptional legal representation for your international tax disputes. By choosing our firm, you gain to benefit from a team of dedicated professionals committed to achieving the best possible results while navigating the complex landscape of tax litigation with confidence and precision.

San Francisco Tax Litigation Lawyers Fighting the IRS

In some cases, litigation represents the most direct and practical approach toward resolving tax disputes with the IRS – particularly when the taxpayer wishes to challenge an improper tax assessment, penalty, or interest charge resulting from an audit. At the Tax Law Office of David W. Klasing, our nationally recognized dual-liscensed IRS tax litigation attorneys and CPAs have over 20 years of combined experience fighting for taxpayers and businesses in San Francisco and beyond, including over a decade of auditing experience. We utilize our extensive tax law experience to execute sophisticated legal strategies to protect our client’s best interests while achieving the best possible outcomes.

Our clients enjoy the advantages of comprehensive legal representation that merges the diverse, in-depth, hands-on experience in tax litigation matters typically associated with larger firms while maintaining the attentive, personalized approach characteristic of a boutique practice. David W. Klasing, both an Attorney and a CPA, has held esteemed positions such as Past Chair of the OCBA Tax Committee, Past Chair of the California Bar Tax Procedure and Litigation Committee, and Past Education Chair of the American Society of Attorney CPAs. Our dual liscensed Tax Litigation & Appeals Attorneys and CPAs represent clients during all phases of the tax dispute process, including audits, litigation before the U.S. Tax Court, trial courts, and appellate courts. We also handle state tax audits, including multistate audits, and regularly represent clients before the California Franchise Tax Board, CDTFA, and Employment Development Department (EDD). This unique background ensures that our clients receive aggressive, technically adept representation tailored to address the complexities of their specific tax disputes and aligned with their best interests. We provide our clients with a careful and thoughtful strategy to manage the audit and achieve a successful result, whether through settlement or, if necessary, by defending their rights in administrative hearings or trials to pursue the best possible outcome.

Contact our tax firm online today for a reduced-rate consultation. You can also call our San Francisco office at (415) 287-6568 or contact our main office at (800) 681-1295. Please note that in-person meetings at our San Francisco location are by appointment only.

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