Oakland Tax Litigation Attorney

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The Internal Revenue Service (IRS) and other taxing authorities like the California Franchise Tax Board (FTB), the California Department of Tax and Fee Administration (CDTFA), and the Employment Development Department (EDD) occasionally get either the law or the facts wrong in an audit, which can result in costly assessments of tax, interest, and penalties for Oakland taxpayers. These errors can stem from misinterpretations of tax regulations, incorrect calculations, or the misapplication of tax laws to specific situations. In some cases, these tax agencies might inadvertently overlook deductions or credits that the taxpayer is entitled to claim.

Suppose a revenue agent misses a minor detail during a tax audit. The result can be an unexpected (and costly) tax assessment, potentially accompanied by interest charges and IRS penalties. In other cases, taxpayers may realize the IRS has improperly charged them after making their payments. Consequently, taxpayers may face substantial financial burdens they should not be held responsible for.

Faced with such consequences, Oakland taxpayers can either accept what the IRS and other taxing authorities do to them or take proactive measures to contest the inaccuracies in the audit findings. Taxpayers can challenge the determinations made by these agencies through various avenues, such as requesting reconsideration of the audit, pursuing an administrative appeal, or ultimately litigating the matter in courts like the U.S. Tax Court, the U.S. District Court for the Northern District of California, or the California Superior Court in Alameda County. By taking these decisive actions, taxpayers can effectively present their cases, supply crucial documentation, and benefit from our firm being staunchly advocates for their rights. This proactive approach significantly increases the likelihood of achieving reduced tax liabilities, minimized interest, and waived penalties, ultimately safeguarding taxpayers’ financial well-being and peace of mind.

If you are confronted with tax disputes related to business or personal income, the seasoned and tenacious dual-licensed Tax Litigation & Appeals Attorneys and CPAs at the Tax Law Office of David W. Klasing are here to help. David W. Klasing is among an estimated 3,000 professionals in the country that has earned a law degree, is a licensed CPA, and has earned a master’s in taxation, making him a highly qualified attorney with specialized knowledge in tax law & accounting. Under his leadership, our nationally acclaimed dual-licensed CPAs and Tax Attorneys boast decades of legal experience, bolstered by decades of IRS and California audit defense experience. Our exceptional track record reflects our unwavering dedication to the individuals, business entities, and trusts we represent. We stand ready to deliver personalized, strategic, and expert guidance to secure the best possible result for your case.

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 civil penalties the taxpayer believes to be resulted from an IRS error during any type of tax audit, including a correspondence audit and an office or a field audit.
Refund Actions – A refund action allows the taxpayer to dispute a tax overpayment already made in full. For this reason, refund actions are less commonly filed than deficiency actions.

To prevail in either case, the taxpayer must follow strict procedural rules and evidentiary standards, which only an experienced tax attorney can manage. While taxpayers may attempt to represent themselves, “pro se” representation is highly 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 dual-licensed Tax Attorney and CPA 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 allow the recipient 90 days to dispute a tax assessment, interest charge, and 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 disputed item (s). Constructing these arguments thoughtfully and thoroughly is critical, as the failure to effectively counter 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 allows the IRS to dispute the taxpayer and defend its original points. 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 the Tax Court, or read about your appeal options if you disagree with the IRS.

In cases where a taxpayer disagrees with the IRS audit findings, they can dispute the deficiency through an expedited appeals process or by filing a lawsuit in Tax Court. Because the expedited appeals process involves the auditor, their manager, and an appeals officer, we have not found it to be an effective resolution method due to the emotional investment of the auditor and their manager in the audit results, leading to an unbalanced negotiation. On the other hand, the regular appeals process is initiated by filing a tax court petition, which allows for an independent review of the taxpayer’s case by an appeals officer who was not involved in the initial audit. This appeals officer will consider the taxpayer’s arguments and evidence, considering the hazards of litigation for the IRS.

If the appeals process fails to resolve the issue, the taxpayer can attempt to settle with IRS Chief Counsel’s office on the Tax Court steps. When filing a lawsuit in Tax Court, the taxpayer must prepare a detailed tax court petition outlining their legal arguments and supporting evidence. The case will proceed to appeals, then to the Chief Counsel’s office, and ultimately to trial if necessary. During the trial, the taxpayer and their attorney present the arguments and evidence to the judge, who will issue a decision that can be appealed to a higher court if needed.

Note: The IRS boasts a 98% out-of-court settlement rate, and as a result, to date, our office has never had to appear in tax court. It has allowed our clients to avoid the costs associated with formal litigation, particularly in cases where we were confident that the facts and the law supported our client’s position from the beginning of the engagement.

Filing a Refund Claim Against the IRS

Though both involve suing the IRS, a refund claim is not the same as a deficiency action. Simply, a deficiency action allows taxpayers to dispute an assessment they received from the IRS following an audit. In contrast, a refund claim enables 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 34.5.2.2 (Pre-Litigation Activity), “If the does not send the taxpayer a notice of claim disallowance, the taxpayer cannot file a suit less than six months from the date he 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 of filing the administrative claim.”

For interested readers, Part 35 of the IRM provides a detailed description covering all aspects of Tax Court litigation. Additionally, our tax attorneys offer a short and straightforward overview of IRS refund actions.

Whether they involve tax overpayments or questionable tax assessments, most Tax Court lawsuits are settled before trial. According to statistics, approximately 98% of cases are resolved through out-of-court settlements. While our firm remains ready, willing, and able to appear in tax court, resolving client issues has never been necessary.

Suppose the appeals process does not lead to a resolution. In that case, the taxpayer can file a lawsuit against the IRS in a Federal District Court or the United States Court of Federal Claims to challenge the refund denial. The litigation process may involve pre-trial procedures, such as discovery, and a trial in which the taxpayer and their attorney present their arguments and evidence before a judge. After the trial, the judge will issue a decision, which, like deficiency disputes, can be appealed to a higher court if necessary.

At the Tax Law Offices of David W. Klasing, our team of dual-licensed Tax Litigation & Appeals Attorneys and CPAs specializes in representing clients in tax refund litigation and navigating the appeals process. Our objective is to resolve tax refund disputes efficiently and cost-effectively, often achieving mutually agreeable resolutions through negotiations and the administrative appeals process, without resorting to court litigation. However, when litigation becomes necessary in pursuing tax refund claims, our skilled dual-licensed Tax Litigation & Appeals Attorneys and CPAs are fully prepared to advocate for you. Our commitment to providing personalized and effective representation has resulted in a successful track record of negotiating settlements with the IRS and other tax agencies, ensuring that our client’s best interests are always our top priority.

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. 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 compared to litigation, we will be sure to compare and discuss all possible avenues with you thoroughly. The following encompasses some alternatives to litigation:

IRS Appeals Process: The IRS Appeals Process offers an independent review of a taxpayer’s case by an Appeals Officer unconnected to the original decision. This process aims to resolve disputes by carefully evaluating the taxpayer’s arguments and supporting evidence. One advantage of the appeals process is its relatively shorter duration and lower costs when compared to actual tax litigation, making it a more accessible option for many taxpayers. Additionally, it maintains the confidentiality of the taxpayer’s information. On the other hand, some drawbacks include its limited scope, as it may not cover all aspects of a tax dispute. Furthermore, there is the possibility that the appeals process may not lead to a satisfactory resolution for the taxpayer, potentially necessitating further legal action.

Mediation: Mediation provides various alternatives, such as early referral, fast-track mediation or settlement, and post-appeal mediation. This approach involves a neutral third-party mediator facilitating discussions between the taxpayer and the IRS or other tax agencies. Benefits of mediation include preserving relationships between parties, typically being faster and more cost-effective than litigation, and maintaining the confidentiality of the taxpayer’s information. However, it may not always be binding or effective in resolving highly contentious or complex cases, in which case litigation might become necessary to achieve a resolution.

Settlement Negotiations with Tax Agencies: Settlement negotiations entail direct talks with tax agencies, including the California Franchise Tax Board, State Board of Equalization, CDTFA, or the Employment Development Department. Pros of this approach encompass potentially reaching mutually agreeable resolutions and being faster and less expensive than actual tax litigation. However, success is not guaranteed, and the process may necessitate extensive documentation and evidence.

Alternative Dispute Resolution (ADR) Programs: ADR programs, specifically designed to resolve tax disputes outside the court system, include arbitration, collaborative law, and neutral evaluation. These programs can be less adversarial, less time-consuming, and less expensive than litigation. However, they may not be suitable for all tax disputes and may not be binding in some instances.

In conclusion, alternatives to tax litigation offer valuable options for resolving tax disputes. These approaches, in some cases, can be more efficient, cost-effective, and relationship-preserving than litigation. At the tax law offices of David W Klasing, we carefully assess each taxpayer’s unique situation and consider which method is most suitable for achieving a fair and favorable resolution. By exploring and understanding these alternatives, we ensure you make informed decisions and navigate tax disputes more effectively. However, if litigation is deemed to serve our client’s best interest, we become assertive champions and will ardently fight for your rights and interests.

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. Let us apply our proficiency and skill in settling tax disputes to your matter. Our tax firm has achieved 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.

The Tax Law Offices of David W. Klasing is consistently ranked as one of the top tax law firms in the nation, with a reputation for excellence supported by numerous awards, rankings, media mentions, and leadership positions. David W. Klasing, the firm’s founder, is an Attorney and CPA, having earned a Master’s in tax. His illustrious career includes serving as the Past Chair of the OCBA Tax Committee, the California Bar Tax Procedure and Litigation Committee, and the American Society of Attorney CPAs Education Chair. With a long history of successful client outcomes, David, to date, has never lost a case, demonstrating his unwavering commitment to ethical and honest representation. You can trust the expertise and dedication of David W. Klasing and our team to provide exceptional legal services in tax law.

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. Contact our main office at (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, whose principal 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. Our appointment only Oakland Tax Office is conveniently located at the following address:

Oakland Tax Litigation Attorney

Steps and Requirements for Suing the IRS in Tax Court

Filing a Deficiency Suit Against the IRS

Filing a Refund Claim Against the IRS

IRS Appeals and Mediation: Alternatives to Litigation

Oakland Tax Litigation Lawyers for Businesses and Individuals

More Commonly Asked Tax Audit Questions

California Sales Tax Questions and Answers

Questions and Answers for Criminal Tax Representation

Questions About Delinquent Payroll Taxes and Trust Fund Recovery Penalty

Tax Help Videos

Representing Clients from U.S. and International Locations Regarding Federal and California Tax Issues

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