Civil Tax Litigation
My goal in every engagement is to resolve the dispute with the Internal Revenue Service (“IRS”) to the client’s satisfaction as quickly and efficiently as possible. In most cases this can be accomplished by using the administrative forums available within the IRS. Fortunately, many of those disputes that cannot be resolved administratively can be litigated in the courts of the United States.
An unresolved audit will usually culminate in the issuance of a statutory notice of deficiency. The statutory notice of deficiency sets out the additional tax owed as determined by the IRS. A taxpayer can challenge this proposed tax assessment by filing a petition in the United States Tax Court. A key advantage to litigation in Tax Court is that the tax does not have to be paid prior to the litigation being commenced. Once the petition is filed, the IRS attorneys will respond with the Commissioner’s answer. The taxpayer’s attorney will then have the ability to obtain information from the IRS using interrogatories, requests for production of documents, and subpoenas. Having represented clients involved in Tax Court litigation throughout the United States, it has been my experience that attorney-to-attorney negotiations are often, but not always, conducive to settlement.
Litigation in U.S. Tax Court
Collection actions proposed by the IRS are also appealable to Tax Court. In order to preserve this right, taxpayers must be careful to comply with the deadlines for filing a Collection Due Process Appeal. Prior to attaching bank accounts or seizing property, the IRS must issue a notice of intent to levy informing the taxpayer that enforced collection action will be the government’s next step in the case. Filing a timely appeal prevents the IRS from taking the threatened collection action. The taxpayer’s appeal will be heard by a Settlement Officer of the Independent Office of Appeals. At the hearing, the taxpayer’s representative can propose avenues for resolving the tax liability as alternatives to the enforcement action recommended by IRS Collections, such as an Offer in Compromise, installment agreement, abatement of penalties, or the granting of Innocent Spouse relief. If the case cannot be resolved with the Settlement Officer, the taxpayer can file a petition for judicial review of the IRS’s failure to accept one of these proposals.
My tax litigation experience includes the following issues:
- Disallowance of Business Expenses
- Fraudulent Conveyances
- “Hobby Loss”
- Innocent Spouse
- Unreported Income
- Unlawful Collection Actions
- Tax Lien to Judgment/Foreclosure
- Shareholder Basis
- Civil Fraud Penalty
- Collection Due Process
- Employee/Independent Contractor Status
- Liability for Trust Fund Recovery Penalty
- “Like-Kind” Exchange
- Freedom of Information Act Requests
- Non-Filers/Estimated Tax Assessments
- Injunction Suits by the Department of Justice