My goal in every engagement is to quickly and efficiently achieve a favorable outcome for my clients. Often times, the best way of accomplishing this is to settle the case at an early stage administratively within the IRS. However, this cannot always be done. Fortunately, if a successful outcome cannot be reached, taxpayers are given the opportunity to litigate their case in one or more of the Federal Courts listed below.
U.S. Tax Court
The majority of cases are heard in Tax Court, before a judge with expertise in tax law. One of the biggest benefits to this forum is that taxpayers are not required to pay the tax assessments before litigating.
Most frequently these cases arrive there after an audit is performed and the taxpayer does not agree with the proposed assessments. The results of the audit are listed in a Revenue Agent Report (RAR) and a Statutory Notice of Deficiency is issued. After the Statutory Notice of Deficiency is issued, the taxpayer is given 90 days to file a Petition with the U.S. Tax Court.
Collection cases can also be appealed to Tax Court. Generally, before the IRS can levy a bank account or garnish wages, they must issue either Form CP 90 or Letter 1058, Notice of Intent to Levy and Your Right to a Hearing. If the taxpayer has filed a timely request for a Collection Due Process Hearing, within 30 days of receiving this notice, the determination made during the Collection Due Process Hearing is appealable to Tax Court. Judicial review is then given to the Service’s decision to reject the taxpayers proposed collection alternative.
U.S. District Court
Taxpayers must exhaust all administrative remedies, and pay the disputed tax, before suing for a refund in U.S. District Court. This can be a favorable forum because it is the only venue that offers the opportunity for a jury trial. However, judges are not necessarily versed in the particulars of tax law.
U.S. Bankruptcy Court
If the taxpayer has filed for Chapter 7, Chapter 11 or Chapter 13 bankruptcy, the Bankruptcy court has the discretion to decide whether IRS tax assessments and IRS tax liens are valid and whether sustained tax liabilities can be discharged.
U.S. Court of Federal Claims
This Court can be another favorable forum for taxpayers who pay the disputed tax and sue for a refund. This Court is based in Washington, D.C.