Require IRS to Pay for your Tax Attorney
Not surprisingly, attorney fees and related costs are often the largest expense associated with resolving IRS disputes. Luckily, the courts can order the IRS to pay attorney fees and costs in some cases.
Attorneys fees can be awarded even though the matter was resolved at the administrative level without the need for litigation. Costs can be awarded from the earliest of the date of the (1) decision of Appeals, (2) notice of deficiency, or (3) first letter of proposed deficiency that allows the taxpayer an opportunity for review by Appeals. Litigation costs can also be awarded.
These fees can even be awarded for non-attorney tax practitioners who only handle IRS tax disputes at the IRS administrative level.
Attorneys fees and costs include:
- Attorney fees;
- Administrative fees or charges by the IRS;
- Reasonable expenses of expert witnesses;
- Reasonable cost of necessary studies, analysis, etc.; and
- Reasonable court costs.
To be awarded attorneys fees and costs:
- The taxpayer must be the party who substantially prevails with respect to the amount in controversy or the most significant issue or set of issues,
- The taxpayer must not have a net worth more than $2 million at the time that the action was filed (or $7 million in the case of business taxpayers),
- The Taxpayer must submit an application and list of fees must be submitted within 30 days of the final judgment in the action,
- The taxpayer must have exhausted his administrative remedies before pursuing litigation, and
- The IRS must not have established that its position was “substantially justified,” i.e., reasonable under the applicable law and the facts of the case.
Most tax practitioners do not help clients secure payment for their services directly from the IRS. If you happen to prevail in a dispute with the IRS, it is up to you to know that you may be able to recover attorneys fees and costs from the IRS.