Frequently Asked Questions About Tax Controversy

An IRS audit examines your tax return for accuracy. The IRS may request documentation to verify income, deductions, and credits claimed. Audits can range from simple inquiries to complex investigations. It’s crucial to cooperate with the IRS and provide requested information promptly. If you disagree with the IRS findings, a tax attorney can represent you and advocate for your position.

If you disagree with an IRS audit finding, you have the right to appeal. The initial step involves filing a formal protest with the IRS Appeals Office. This office is independent of the auditing agent and can offer a more impartial review. Your tax lawyer can guide you through the protest process, present your case, and negotiate a favorable settlement with the IRS.

Tax litigation involves taking your case to court. There are three primary forums for tax litigation in the US:

• The U.S. Tax Court: This specialized court hears tax cases before you pay the disputed tax. It offers a streamlined process with lower filing fees compared to federal courts.
• The U.S. District Court: You can file a lawsuit in federal district court after paying the disputed tax and any penalties. This option allows for a jury trial but comes with higher costs and a potentially longer resolution timeframe.
• The U.S. Court of Federal Claims: This court handles tax refund lawsuits where you believe the IRS owes you a refund.

The IRS can impose penalties for late filing, underpayment of taxes, or errors on your tax return. Penalties vary depending on the situation. Consulting a tax attorney can help minimize penalties by ensuring accurate filing and timely communication with the IRS during an audit. In some cases, your lawyer may be able to negotiate a reduction or elimination of penalties based on reasonable cause for errors.

An Offer in Compromise (OIC) is an agreement between you and the IRS to settle your tax debt for less than the full amount owed. This option may be suitable if you cannot afford to pay the full amount due to financial hardship. A tax attorney can guide you through the OIC process, assess your eligibility, and negotiate a favorable settlement with the IRS.

Ignoring an IRS notice can have serious consequences. Failure to respond may result in default judgment against you, leading to enforced collection actions like wage garnishment or property liens. If you receive an IRS notice, even if you disagree with it, it’s crucial to respond promptly. A tax attorney can advise you on the best course of action based on the specific notice.

The timeframe for resolving a tax controversy can vary significantly depending on the complexity of the case and the chosen forum. Appeals within the IRS can take several months, while litigation in Tax Court or federal courts could last a year or more. Consulting a tax attorney can help manage expectations and set realistic timelines for resolving your case.

Tax law is complex, and navigating a tax controversy can be overwhelming. A qualified tax attorney possesses the specialized knowledge and experience to protect your rights and advocate for your best interests throughout the process. They can handle communication with the IRS on your behalf, negotiate settlements, and represent you in court if necessary.

Bankruptcy can offer relief from some types of debt, but tax debt is generally not dischargeable. There are limited exceptions in Chapter 13 bankruptcy, but these are quite specific. Consulting a tax attorney and a bankruptcy lawyer can help you understand your options and explore potential solutions for managing tax debt outside of bankruptcy.