IRS Tax Court Litigation
IRS Tax Litigation: Take the IRS to Court
The IRS can act unreasonably. It takes positions that are contrary to our tax laws. In other instances the IRS pursues litigation to create IRS-friendly tax laws or to make an example out of the taxpayer. In these cases it is often necessary to take the IRS to court.
Filing suit against the government puts the IRS on notice that the taxpayer intends to enforce his or her rights. It may also allow the taxpayer to have the IRS Office of Appeals review and possibly settle the matter. Even absent administrative appeals review, filing suit also allows the IRS’s attorneys to review and possibly settle the case.
The IRS’s attorneys are often more reasonable than the IRS field level personnel, as they are more aware of the fact that the courts often overturn the IRS’s administrative decisions and rule against the IRS. If the IRS’s assessment or position is tenuous or wrong there is a possibility that the IRS attorney will agree to settle the case in the taxpayers favor.
If the case is not settled outside of court, then the taxpayer is afforded the opportunity to present their case in court. In some circumstances, if it is apparent that the IRS’s position was not reasonable then the taxpayer may even be able to recover penalties and attorneys fees from the government.
There are a number of trial level courts that hear tax matters, including the: U.S. Tax Court, Court of Federal Claims, Federal District courts, and bankruptcy courts. The type of matters that the court can consider varies greatly. How each court handles particular matters also varies. This presents a unique opportunity to select the most favorable court and forum for different tax matters.
An experienced tax advisor can help you determine whether you should take you case to court and which court in which to file your case.
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