Oakland Tax Litigation Attorney
The Internal Revenue Service occasionally gets either the law or the facts wrong in an audit, which can result in costly assessments of tax, interest and penalties for Oakland taxpayers. For example, if a revenue agent misses a minor detail during a tax audit, the result can be an unexpected (and extremely expensive) tax assessment, potentially accompanied by interest charges and IRS penalties. In other cases, taxpayers realize they have been improperly charged by the IRS after they have already made their payments.
If you have found yourself faced with either of these scenarios, whether in relation to business or personal income, the aggressive and experienced tax litigation attorneys at the Tax Law Office of David W. Klasing can help. With decades of legal experience, which is further supported by more than 10 years of auditing experience, our nationally recognized CPAs and Tax Lawyers are distinguished by a track record that reflects our unwavering commitment to the individuals, business entities, and trusts we serve. If you need assistance resolving a tax dispute with the IRS, whether through litigation or appeals, the Tax Law Office of David W. Klasing is standing by to provide dedicated and strategic support.
Steps and Requirements for Suing the IRS in Tax Court
There are essentially two types of IRS lawsuits that can be successfully litigated by the taxpayer:
- Deficiency Actions – A deficiency action enables the taxpayer to dispute a tax assessment, interest charges, and/or civil penalties the taxpayer believes resulted from an IRS error during any type of tax audit, including a correspondence audit, an office audit, or a field audit.
- Refund Actions – A refund action allows the taxpayer to dispute a tax overpayment that has already been made in full. For this reason, refund actions are less commonly filed than deficiency actions.
In order to prevail in either type of case, the taxpayer must follow strict procedural rules and evidentiary standards, which only an experienced tax attorney is qualified to manage. While taxpayers may attempt to represent themselves, “pro se” representation is extremely inadvisable due to the technical complexity of the IRS regulations, federal statutes, and prior court rulings that arise throughout the proceedings. It is in your best interests to be represented by a competent and knowledgeable Oakland tax lawyer when proceeding toward litigation against the IRS.
Filing a Deficiency Suit Against the IRS
A “deficiency” suit arises from an IRS “notice of deficiency,” hence the term. Notices of deficiency are also referred to as “90-day letters,” because, with an exception we will discuss momentarily, they allot the recipient 90 days in which to dispute a tax assessment, interest charge, and/or penalty resulting from a tax audit. The exception applies to taxpayers who receive their notice of deficiency while overseas, in which case the 90-day period extends to 150 days.
The deficiency notice gives the Tax Court jurisdiction, enabling the taxpayer to file a petition. This petition must be filed, at the very latest, by the date provided on the taxpayer’s 90-day letter. The petition must provide a concise yet detailed overview of the item(s) in dispute. Constructing these arguments thoughtfully and thoroughly is critical, as the failure to effectively dispute a given point or issue could be interpreted as the taxpayer’s acceptance of IRS positions.
After the petition has been filed and served, the IRS may file an “answer” in reply, generally within 60 days. The answer gives the IRS the opportunity to dispute the taxpayer and defend its original points. Broadly speaking, taxpayers need not file formal “replies” in response to IRS answers, though exceptions can arise depending on whether the IRS files a request, called a “motion,” with the Tax Court. For a more detailed explanation of this process, review our discussion of the requirements to litigate a deficiency action in Tax Court, or read about your appeal options if you disagree with the IRS.
Filing a Refund Claim Against the IRS
Though both involve suing the IRS, a refund claim is not the same as a deficiency action. Put simply, a deficiency action allows a taxpayer to dispute an assessment that he or she has received from the IRS following an audit, whereas a refund claim allows a taxpayer to seek the recovery of funds that have already been paid in full.
The taxpayer must take several steps before initiating a refund action against the IRS. For instance, the taxpayer must first attempt to resolve the issue by filing Form 1040X (Amended U.S. Individual Income Tax Return) or Form 1120X (Amended U.S. Corporation Income Tax Return). Additionally, there is a six-month waiting period. As the IRS explains in Internal Revenue Manual 34.5.2 (Refund Litigation), under 126.96.36.199 (Pre-Litigation Activity), “If the [IRS] does not send the taxpayer a notice of claim disallowance, the taxpayer cannot file a suit less than six months from the date he [or she] filed a claim for refund. […] If the taxpayer does not waive a notice of claim disallowance, and the Service has not issued such notice… the taxpayer may file a refund suit… after six months from the filing of the administrative claim.”
For interested readers, Part 35 of the IRM provides an exhaustive description covering all aspects of Tax Court litigation. Additionally, our tax attorneys offer a short and simple overview of IRS refund actions.
Whether they involve tax overpayments or questionable tax assessments, the vast majority of Tax Court lawsuits are settled prior to trial. According to statistics, approximately 96% of cases are resolved through out-of-court settlements. In fact, while our firm remains ready willing and able to appear in tax court, to date, it has never been necessary to resolve a client issues.
IRS Appeals and Mediation: Alternatives to Litigation
Tax litigation is not the optimal strategy for addressing every taxpayer’s matter. Depending on the circumstances, it may be more pragmatic to explore alternatives to tax litigation, such as one of the various mediation options available through the Alternative Dispute Resolution (ADR) program administered by the IRS Office of Appeals. Depending on whether the taxpayer is a business entity, a self-employed individual, or a tax-exempt entity, these options include early referral, fast track mediation or settlement, and post-appeals mediation. While these approaches are generally time- and cost-saving as compared to litigation, we will be sure to thoroughly compare and discuss all possible avenues with you.
Oakland Tax Litigation Lawyers for Businesses and Individuals
Without an experienced tax attorney supported by a team of internal CPAs in your legal corner, it is challenging to determine the best approach to dispute resolution – and nearly impossible to plan and execute that approach successfully. Allow us to apply our proficiency and skill in settling tax disputes to your matter. Our tax firm has achieved such consistent success in IRS appeals representation, it has never been necessary to bring a client’s case to trial. We are ready to devote the same tenacity and focus to resolving your case.
To arrange a reduced-rate tax consultation regarding an improper tax assessment or overpayment, contact the Tax Law Office of David W. Klasing online, or call our Oakland tax office at (510) 764-1020. You can also contact our main office by calling (800) 681-1295. Please be advised that all meetings at our Oakland location are by appointment only.
If you have concerns about the privacy of our initial or subsequent communication and are unable to easily travel to our Irvine / Orange County Main Office, consider scheduling a GoToMeeting to safely and securely establish an initial or maintain an existing attorney client relationship. With end-to-end encryption, strong passwords and top-rated reliability, no one is messing with your meeting. To schedule a reduced rate initial consultation via GoToMeeting follow this link. Call our office and request a GoToMeeting if you are an existing client. We are generally happy to travel to any of our appointment only satellite offices for a subsequent meeting in appropriate circumstances once a relationship is established via a signed engagement letter and the payment of an initial retainer or where enough retainer is available where a current client to cover the reasonable travel time and time required for the meeting.
Will it cost me more to hire the Tax Law Offices of David W. Klasing, who’s main office and the vast majority of the firm’s staff is located in Irvine California, but an appointment only Satellite office is close to my location, as opposed to a local company? Absolutely not! See our policies that address this issue here: