Few people relish or want to fight the IRS and their army of agents, investigators and prosecutors. After all, for many taxpayers, their only goal after receiving notice of a serious tax problem is to resolve the tax litigation issue and make it go away as quickly as possible. Unfortunately, for serious accusations of large tax debts, alleged wrong-doing, or where the taxpayer has corporate tax issues, a rapid resolution to the tax issue may not be possible.
In some circumstances, the taxpayer’s option most likely to reduce the charges and penalties faced is litigation. While litigating a tax controversy is not always the right choice, when the individual faces a tax debt that they cannot possibly satisfy, litigating the matter may provide additional leverage. Particularly in the case or a significant deficiency it may be necessary to go through tax litigation to protect the freedom of the taxpayer or tax professional.
What Should I do if I have Received an IRS Notice of Deficiency?
A taxpayer who has a tax debt that is due, owing, and unpaid will receive a notice of deficiency. The notice, sometimes called a 90 day letter, gives the taxpayer notice that this unpaid tax obligation will be enforceable in 90 days. The letter will contain the last date on which a tax payer is entitled to file an action in Tax Court or face tax litigation. Furthermore, the letter will also contain information regarding the legal basis for the additional amounts sought. Most commonly, the tax deficiency letter is sent at the conclusion of a tax audit.
Thus, if you have already received a notice of deficiency from the IRS, your first concern should be locating tax records, financial information, and any other evidence that may be relevant to the allegations or your defenses to provide to your tax lawyers. Second, you should contact an experienced tax litigation attorney without delay to avoid the potential loss of your right to petition for relief from a tax court. While not every tax issue can be litigated, the types of actions most frequently litigated successfully are deficiency actions and refund actions. However, since a taxpayer is not required to prepay a deficiency action, tax deficiency actions are much more common.
When Is it Appropriate to Litigate through a Deficiency Suit or a Refund Claim?
For a taxpayer to bring a deficiency suit, he or she must have already received a deficiency letter from the IRS. Notice that is sent to the taxpayer’s last known valid address is usually sufficient for purposes of notice. Furthermore, the suit must be filed within 90 days if the taxpayer is within the United States. If the notice ifs mailed to a taxpayer living outside of the United States, then the individual has up to 150 days to file suit with the Clerk of the Tax Court in Washington D.C. the taxpayer is required to list each and every error in law or fact made by the IRS. If the taxpayer fails to raise an error, that point is conceded to the government.
The requirements to bring a refund action are different. A refund action is filed after a taxpayer has paid and alleged tax debt in full and is now seeking to recover the funds. Therefore, to bring a refund action the taxes must be paid in full. Second, the taxpayer must exhaust his or her administrative remedies by filing a timely claim for a refund using IRS Form 1040X or 1120X or other appropriate forms. Last, at least six months after filing the initial refund claim or upon receipt of a notice of disallowance, the taxpayer may file a claim to litigate the matter.
Both the refund and deficiency methods of tax litigation have certain strengths and certain weaknesses for a taxpayer. Before deciding on a legal strategy, a taxpayer should closely consult with an experienced tax litigation lawyer to ensure that important legal rights or remedies are not lost because a mistake in strategy.
Facing Serious Tax Charges in Los Angeles?
If you are facing a significant tax bill that you almost certainly cannot pay or satisfy, litigating your matter may be the most likely way to reduce or eliminate the penalties you face. Furthermore, if you have already paid a tax debt erroneously, litigating the matter may provide tax relief. However, litigating a tax action is replete with technicalities and other legal pitfalls. For instance, in a deficiency action interest can continue to accrue. Working with an experienced tax attorney who understands the system can help taxpayers proceed with their dispute strategically.
The experienced tax defense attorneys and CPAs of the Tax Law Offices of David W. Klasing take a strategic and aggressive approach to tax litigation. We work to mitigate the consequences faced by the taxpayer or tax preparer. To schedule a reduced-rate consultation to discuss your tax concern or criminal tax charges call 800-681-1295 today or contact us online.
At the Tax Law Offices of David W. Klasing, I provide aggressive representation for clients facing disputes with state and federal tax authorities. I offer more than 20 years of experience handling highly complicated tax matters throughout Orange County, Los Angeles, and surrounding areas. When you select my legal services, you gain the benefit of working with an experienced tax attorney and CPA for the same price.
Among my credentials as an Orange County tax litigation attorney, I am the chair elect of the California State Bar Association Tax Procedure and Litigation Committee. I am also vice chair of the Orange County Bar Association Tax Section and I am a Member at Large of the California Society of CPAs Committee on Taxation.
Have a Nationally Recognized Tax Litigation Attorney on Your Side
Our Office has developed national practice as to federal income tax issues administered by the IRS, so no matter what state you are from, if you are presently under tax audit, considering filing an appeal or considering tax litigation, we can help provide an effective defense by simply moving the audit, appeal or tax litigation to an IRS field office or tax court local to one of our offices.
Few attorneys are competent to handle the complexities of taxation within the context of an audit, appeal or litigation. It is sometimes said that while the focus of an accountant is accuracy, the focus of an attorney is advocacy. Our Office’s expertise and training combines both fields: We place a premium on both accuracy and client advocacy.
Offering Strong Advocacy in Tax Litigation
As a certified public accountant (CPA), I have comprehensive knowledge of federal and state tax codes, regulations and case law and offer strategic insight as a former auditor in public accounting. From my tax law offices in Los Angeles and Irvine, California, I can help protect your best interests in disputes over:
- Income taxes
- Payroll taxes
- Corporate taxes
- Estate and gift taxes
- Excise taxes
- Property taxes
- Sales and use taxes
I handle all types of tax litigation matters, including cases involving trust fund recovery penalties and disallowed business expenses. I may be able to help you negotiate an offer in compromise.
To help strengthen your case, I have maximized the resources of my Orange County tax litigation law firm. I have access to extensive onsite and online research libraries and routinely utilize online listservs with other tax, accounting and legal professionals that consistently have proven to be invaluable in helping me deal with complex tax, accounting and legal matters. Moreover, my work as chair elect of the California State Bar Tax Procedure and Litigation Committee, vice chair of the Orange County Bar Tax Section and participation as part of the California Society of CPAs Committee on Taxation keeps me on the cutting-edge of taxation and gives me constant access to the brightest tax minds in the state.
Put My Tax and Accounting Experience to Work in Your Case
As evidence of my commitment to problem solving, I have a strong and sustained record of favorable outcomes for clients. For example, I helped a client who owed $1.5 million in back taxes reduce his tax debt to $240,000. I helped another client reduce her payroll tax debt as an alleged responsible party from $380,000 to nothing.
Most cases settle before going to court, and I can help you determine whether going to court would be in your best interests. Many cases settle on the court house steps. My extensive tax settlement experience can help you avoid litigation where possible. I know it can be intimidating to deal with the Internal Revenue Service, the Franchise Tax Board, the Board of Equalization, and the Employment Development Department. I will keep you informed throughout the tax litigation process to help you reduce your stress.
Questions and Answers About Tax Litigation
- Requirements to litigate tax court deficiency action
- How to litigate claim in Federal Claims or District Court
- What discovery methods apply in Federal Tax Litigation?
- What is a notice of deficiency?
- What tax issues can be successfully litigated?
- Which federal court should I litigate my tax issue in?
- Who can represent a taxpayer in the Tax Court?
- Who has the burden of proof in Tax Litigation