Tax Appeals and Litigation

Tax Appeals and Litigation

If you disagree with the results of an IRS audit, you may have an opportunity to present your argument on appeal by timely filing a written protest that requests an appeals conference. One advantage of the appeals process is the possibility of settling your case based on the hazards of litigation. If you are unable to settle at this level, the next step is to litigate the case in Tax Court, which may be cost prohibitive, particularly where there is a legitimate dispute as to the facts or application of the law.

Tax Litigation

Federal tax disputes can be litigated in various courts including the Tax Court, District Court, the US Court of Federal Claims, and even the Bankruptcy Court in certain circumstances. Choice of forum is an important decision that may affect the outcome of your case. For example, one potential advantage to District Court is the opportunity for a jury trial. The District Court and US Court of Federal Claims are known as refund forums, meaning the disputed tax has to be paid before these courts have jurisdiction to hear your case. The Tax Court, on the other hand, does not require prepayment of the tax in order to hear your case, and is therefore the most popular forum for litigating federal tax disputes.

How to Get into US Tax Court

After an audit, the IRS will issue a determination known as a 30-day letter. This letter gives the taxpayer 30 days to appeal the decision. If no appeal is filed, or if no settlement is reached, the IRS issues a notice of deficiency, also known as a 90-day letter. The 90-day letter gives the taxpayer 90 days to file a Tax Court petition. This is an important letter as it is the taxpayer’s ticket to Tax Court. In general, a taxpayer cannot get into Tax Court without this letter, nor can a taxpayer get into Tax Court after the 90 days expires.

Audit Reconsideration

Quite frequently, the window of time allowed to file a Tax Court petition will lapse. In these situations, the IRS has a process called Audit Reconsideration, which allows an administrative remedy for taxpayers unable to pursue a previously assessed tax bill in court. This can be a great option when a taxpayer was non-responsive to the IRS’s initial findings.

California Income Tax Appeals

In California, the Franchise Tax Board (FTB) initiates income tax audits. At the end of the audit, the FTB will issue a proposed assessment. The proposed assessment can be disputed by filing a written protest letter with the FTB in a timely manner. After the appeal, the FTB will issue a Notice of Action that documents the findings. If you still disagree, another appeal may be filed with the Board of Equalization (BOE) within 30 days. In this appeal, a hearing before the BOE may be requested. If an agreement is not reached after this point, the tax can be paid followed by a claim for refund. If the claim for refund is denied, an action can be filed against the FTB in the California Superior Court.

One of the most important aspects of disputing an auditor’s findings is to understand your rights, and to stay on top of deadlines and procedures in order to preserve those rights. There are many avenues to dispute the findings of an audit, and the best option will vary depending on the unique circumstances of each client. For example, it may be faster and less expensive to deal with the amount assessed in some other way that offers compromise or bankruptcy, rather than disputing the tax. No matter the situation, our firm always looks at the big picture when determining the best way to resolve a tax dispute.

Let Us Help You Fight Your Tax Dispute

If you were selected for an IRS tax audit and disagree with the results, we encourage you to contact NewPoint Law Group. Our experienced attorneys may be able to resolve your disputes. To schedule a free consultation, call 1-800-358-0305 or contact us online today.