As an American taxpayer, you have legal rights. It may seem that the IRS is an all-powerful agency with the power to tell you what you owe, and then to collect on that; however, know that the IRS is not foolproof. Simply put, the people who examine and audit your taxes are human beings, and sometimes mistakes are made.
If you disagree with an IRS decision or cannot afford your adjusted obligation, you have the right to a tax appeal and to negotiate with the IRS. Unfortunately, these options do not always have a satisfactory result. This is why some taxpayers choose to bring their dispute to tax court.
What is Tax Court?
Tax Court consists of Federal Justices who are specially appointed to hear lawsuits against the IRS. These Justices of the tax courts are intelligent and highly knowledgeable about tax laws and how to apply them. In addition, all trials in tax court are before a Justice, and not a jury. This means that tax cases are decided by people understand the law, removing a layer of uncertainty that comes with juries. So if the law is on your side, you have an advantage.
Tax Cases Are Likely to Settle
The overwhelming majority of cases that are filed in tax court end in settlement. The IRS doesn’t want to unnecessarily spend the resources and time to defend itself in a trial, nor does it want to risk losing. The IRS is focused on winning and has a very high success rate; therefore, the agency understands the reputational hit it takes when it loses a case. It is possible that after a tax appeal or efforts to compromise have failed, that bringing the matter before a tax court may compel the IRS to make you a better offer.
For “small” claims, involving less then $50,000 in dispute, there is a quicker and less formal process in tax courts. This is an expedited process in which a judgment is issued more quickly. However, there is no further appellate remedy with a small claim.
Tax Court Proceedings Buy You Time
One of the additional benefits of filing in tax court is that you do not have to pay your tax bill as a prerequisite to filing a cause of action. Filing a case in tax court effectively puts your tax obligation on hold pending the legal proceedings. In other words, you do not have to pay your outstanding tax bill during your lawsuit, which buys you time to pay. Further, if you happen to go to trial, it can take a Justice a very long time to consider and make a determination regarding your case.
Consider a Tax Appeal
If you have received a notice from the IRS that you owe significantly more money that you thought, contact the Law Office of Robert S. Thomas. You have legal rights and numerous options to challenge the IRS. We will listen to you and review your claim to help determine whether a tax appeal would be worth pursuing. I have more than twenty years of legal experience in IRS taxation and am licensed to practice in Federal Tax Court. Contact my office today at 847-392-5893 to schedule a consultation or visit our website today.