IRS Tax Litigation Attorney
Few people wish to dispute the IRS and its army of agents, investigators, and prosecutors. After all, for many taxpayers, the primary goal after receiving notice of a serious tax issue is to resolve the matter as quickly – and cost-effectively – as possible. Unfortunately, when it comes to allegations involving large IRS tax debts, alleged tax fraud, or corporate tax issues, a rapid resolution to the tax dispute may not be possible. In complex cases like these, the most pragmatic option may be to initiate tax litigation by suing the IRS with help from an experienced tax litigation attorney.
While litigating a tax controversy is not always the right choice, this approach may provide additional leverage in cases where the taxpayer owes a tax debt they cannot possibly satisfy. Particularly in the case of a significant deficiency, it may be necessary to engage in tax litigation to protect the freedom of the taxpayer or tax professional. At the Tax Law Office of David W. Klasing, we provide aggressive legal representation for clients facing disputes with state and federal tax authorities, including the IRS, the California Department of Tax and Fee Administration (CDTFA), and California’s Franchise Tax Board (FTB). If you need help resolving a state or federal tax dispute in California, our tax firm is here to provide 24/7 assistance.
When is Tax Litigation Advisable?
IRS and California auditors are known to quite frequently get either the facts at issue or the law at issue in your audit wrong in arriving at an assessment of additional tax penalties and interest. A taxpayer that wants to challenge this error has limited options. A Tax Attorney is invaluable in rectifying the situation.
Most of the time it is, in my opinion, best to pass on the opportunity of entering into fast track mediation as the taxpayer and their representative will have to convince an appeals officer that the auditor and their manager got either the facts or the law wrong in a face to face meeting with the IRS auditor and their manager present with the appeals officer.
When a taxpayer chooses to sue the IRS over their errors by filing a tax court petition, they (and or their representative) will have the opportunity to argue the case with appeals without the auditor and their manager present. Since the auditor and their manager are ordinarily emotionally invested in the outcome of the case and defensive of their reputation, the appeals officer is not, in my opinion, advantageous to skip fast track mediation and proceed directly to filing a tax court petition to address the issues in the audit.
Moreover, If the appeals process does not bear fruit, the tax court is not part of the IRS. Instead, this court is part of Congressional oversight of tax disputes without IRS interference.
It gives taxpayers the opportunity to argue that the IRS is not treating them fairly before an impartial judge. There is no jury in a case like this. The taxpayer becomes the plaintiff in this type of case, while the IRS becomes the defendant.
The most common type of case to litigate in tax court occurs after an audit. If the taxpayer and his or her representative disagrees with the findings of the IRS in an audit, tax litigation is an option.
The burden of proof for the taxpayer in this type of action is extremely high. The taxpayer will need extensive, credible evidence that shows the IRS did not behave in a proper manner in the case. This is not a type of case that is easy to win, especially if you don’t have a representative who is well-versed in how the IRS operates and in how tax litigation cases work. On the other hand a reputable tax attorney will not opt for tax litigation if it is not likely to benefit the taxpayer. Our office for example has never taken on tax litigation that did not substantially improve our client’s position.
When drafting a tax court petition against the IRS in a tax litigation case, it is imperative that it be done correctly or the taxpayer could lose important rights in the litigation process. The filing of the petition is the practice of law and therefore you will ordinarily need an experienced tax attorney on your side to ensure the best odds of success. Non attorneys, (CPAs, EAs and CTEC certified preparers) cannot successfully represent you in tax court.
Why Hire the Tax Law Office of David W. Klasing to Litigate Your IRS Claim?
Our tax attorneys offer more than 20 years of experience handling highly complicated tax matters throughout Northern and Southern California, including Los Angeles, San Francisco, San Diego, and Sacramento. When you retain the legal services of David W. Klasing, you gain the benefit of working with an accomplished, award-winning tax attorney and CPA for the same price, ensuring cost-efficient yet comprehensive representation.
Among Mr. Klasing’s credentials as an Orange County tax litigation attorney, he is a past chair of the California State Bar Association Tax Procedure and Litigation Committee and of the Orange County Bar Association Tax Section, and an active Member at Large of the California Society of CPAs Committee on Taxation.
What is an IRS Notice of Deficiency?
A taxpayer who has a tax debt that is due, owing, and unpaid will receive a written notice of deficiency from the Internal Revenue Service. The IRS notice of deficiency, sometimes called a “90-day letter” or “tax deficiency letter,” gives the taxpayer formal notice that his or her unpaid tax obligation will become enforceable in 90 days. The letter will also contain the latest date on which the taxpayer is entitled to file an action in Tax Court. Additionally, the letter will also contain information regarding the legal basis for the additional amounts being sought by the IRS.
Most commonly, the tax deficiency letter is sent at the conclusion of an IRS tax audit, as discussed here. If you have been selected for an audit, you should contact a tax audit attorney for guidance right away. For more on this topic, you may also be interested in our discussion of how the audit and litigation cycle works.
What to Do if You Have Received a Notice of Deficiency from the IRS
If you have received a notice of deficiency from the IRS, your immediate 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. Obtain as many financial records as you can find, such as pertinent tax returns, bank statements, invoices, Forms W-2 or 1099, and residential or commercial leases.
Second, you should contact a tax litigation lawyer 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. Though both are prevalent, Tax Court deficiency actions are much more common, as taxpayers are not required to prepay deficiency actions.
When Should You File a Deficiency Suit or Refund Claim Against the IRS?
Only an experienced tax litigation attorney can determine when litigation is the most appropriate means of dispute resolution, as opposed to alternative methods like arbitration or mediation. Depending on the nature of your case, there are certain factors to keep in mind before you attempt to litigate a claim in federal claims or district court, such as legal deadlines and outstanding tax debts.
Filing a Deficiency Suit Against the IRS
For a taxpayer to bring a deficiency suit, he or she must have already received a deficiency letter from the IRS. Note that an IRS letter sent to the taxpayer’s last known valid address is generally deemed sufficient for purposes of notice.
Furthermore, the taxpayer must file his or her suit within 90 days if he or she is located within the United States. If the taxpayer resides outside of the United States, then he or she has additional time – 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. It is critical to note that, if the taxpayer fails to raise an error, that point is conceded to the government. Therefore, it is critical to work with an attorney who has considerable experience litigating cases like yours.
Filing a Refund Claim Against the IRS
The requirements to bring a refund action are different. There are three crucial factors to consider:
- First, a refund action can only be filed after an alleged tax debt has been paid in full, with the taxpayer seeking to recover the funds. Therefore, as mentioned earlier, federal tax debts must be fully paid before the taxpayer may bring a refund action against the Internal Revenue Service.
- In addition, the taxpayer must exhaust his or her administrative remedies by filing a timely claim for a refund using IRS Form 1040X (Amended U.S. Individual Income Tax Return), Form 1120X (Amended U.S. Corporation Income Tax Return), or other appropriate forms.
- Third, there is a waiting period. Only six months (or longer) after filing the initial refund claim, or upon receipt of a notice of disallowance, may 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 a knowledgeable tax litigation lawyer to ensure that important legal rights or remedies are not forfeited because of a tactical oversight.
Tax Litigation Attorney and CPA Serving Northern and Southern California
If you owe a tax debt that you likely cannot pay or satisfy in the foreseeable future, litigating your matter may be the most effective way to reduce or eliminate the IRS penalties you face. Furthermore, if you have already paid a tax debt erroneously, litigating the matter may provide substantial 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 attorney-CPA who understands the system can help taxpayers proceed with their dispute strategically.
The California tax defense attorneys and CPAs of the Tax Law Office of David W. Klasing take an innovative and forward-thinking approach to tax litigation, working tirelessly to mitigate the consequences faced by the taxpayer or tax preparer. To schedule a reduced-rate consultation concerning an IRS dispute, call (800) 681-1295, or contact the Tax Law Office of David W. Klasing online.
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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.
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