Articles Posted in Tax Disputes

Which Court Should You Use For Your Tax Dispute
There are actually four different courts that can be used for tax litigation. The United States Tax Court is the most commonly used option, but other courts may have advantages in certain situations.

The four courts with jurisdiction to hear tax controversy cases are:

  • Tax Court

What To Do When You Receive an IRS Notice
Receiving a notice from the IRS is not something most people look forward to. You may be confused as to what the notice is saying, and afraid of the possible consequences, such as owing substantial back taxes, interest, and penalties.

However, there are two important things to know about most IRS notices:

  1. You may have the right to challenge or appeal the action the IRS is taking, and

How to Use the IRS Fast Track Settlement Program for Small Businesses
Fast Track Settlement (FTS) is an IRS program designed to resolve tax disputes within 60 days with the help of a trained mediator. Small businesses and self-employed taxpayers can used this program to quickly and efficiently resolve tax disputes, while still retaining all of their other appeal rights.

Before using FTS, a taxpayer must attempt to resolve all issues with the IRS auditor and their supervisor. If no agreement can be reached, then the taxpayer can use form 14017, along with a written statement of her  position on the disputed issue, to apply for the program.

There are several advantages to FTS, when compared to appeals within the IRS or filing a petition in Tax Court:

How Can I Stop IRS Collection Actions?
The IRS is a fearsome creditor that can gain access to many of your assets to satisfy your tax debt. Unlike other creditors it doesn’t need to bring a lawsuit to go after you’re the bulk of your assets. The IRS has the ability to use any of the following collection actions against you:

  • Serve a levy on your bank account
  • Serve a levy on your wages

The IRS Is Not Always Right: How to Fight Back
Dealing with an IRS mistake can be a frustrating experience, but it happens fairly often. There are many different types of error the IRS can make:

  • Wrongful calculation of penalties and interest
  • Wrongful assessment of penalties

What Should I Look for in a California Tax Lawyer
When you need tax help, it only makes sense to look for in-depth experience in all of the tax laws relevant to you and your business. Federal and California state tax laws are constantly changing, and it isn’t easy for the average taxpayer to keep up with all of the changes from one tax year to the next. You need professional guidance from a tax lawyer.

Accountants and tax preparers can handle certain tax matters, but there are some situations where working with a tax attorney has its advantages. The attorney client privilege offers protection for your communications with your attorney. This is particularly important if you are concerned that the IRS may bring a criminal tax case against you.

What to Expect from a California Tax Lawyer 

Depressed businessman sitting under falling papers
Bankruptcy Appellate Panel Finds in Favor of the Taxpayer in Late-Filed Taxes Discharge Question

In the previous blog post we set forth the facts in a bankruptcy proceeding where the IRS argued that taxes filed even one day past assessment would result in the nondischargeability of the debt in bankruptcy. In this post we will examine the Bankruptcy Appellate Panel’s (BAP) analysis and issued guidance in the proceeding In re Kevin Wayne and Susan Martin, EC-14-1180-KuKiTa (9th Cir. BAP 2015).

Bankruptcy Court Found the Tax Debts Were Dischargeable

Close up of a yellow pencil erasing the word, 'Bankruptcy.' Isolated on white.
The Internal Revenue Code and the Bankruptcy Code are each complex laws, but when they intersect things can get quite confusing, and seemingly inconsequential facts can have serious legal consequences. In a recent unpublished opinion, In re Kevin Wayne and Susan Martin, EC-14-1180-KuKiTa (9th Cir. BAP 2015), the Bankruptcy Appellate Panel (BAP) provided some guidance as to the effect the non-filing of a tax return or the filing of a tax return post-assessment can have on one’s eligibility for discharge through bankruptcy. While the court did not provide a bright-line rule, it did provide an explanation as to the applicable standards regarding what constitutes a “return” for purposes of a bankruptcy discharge. Taxpayers and their bankruptcy and tax attorneys can consider and apply the announced standard to gain a better insight into the impact their non-filing may have on contemplated bankruptcy proceedings. Of course the story may not be over, and the IRS may still appeal the BAP ruling.

Providing further clarity and a rejection of the harsh consequences imposed by a literalist approach and the IRS-advocated positions, the court also addressed a number of other arguments regarding the proper definition of a “return” and the analytical framework when determining a taxpayer’s eligibility for a bankruptcy discharge. In doing so the BAP rejected an approach that had gained favor in other courts. In doing so the BAP refused to follow other courts which had interpreted tax and bankruptcy law in a way which would make a tax debt nondischargeable whenever a tax return is filed even one day late. It also rejected the IRS position that once the IRS makes an assessment in the absence of a filed tax return that tax debt is non-dischargeable even though the taxpayer subsequently files a tax return.

The Taxpayers Failed to File Their Tax Returns for Multiple Tax Years

USA passport, compass and foreign coins sit on a map of Europe for an international travel concept.
One’s failure to understand the obligations and duties one holds under the U.S. Tax Code can always result in significant additional penalties and interest on any unsatisfied tax debt. Aside from these serious penalties, a proposed provision contained within the pending 2015 highway & transit funding bill, aka the Surface Transportation Reauthorization and Reform Act of 2015, would introduce new consequence on top of fines and penalties for certain taxpayers with “seriously delinquent taxes.” This new measure would permit the IRS to submit a list of individuals who are subject to non-renewal, cancelation, and restrictions on their U.S. passports.

The Bill has been passed by both the House, and the Senate, but there are still impediments to its final implantation. A provision in the bill authorizes the U.S. government to revoke, deny, or limit one’s U.S. passport if the person owes more than $50,000 in “seriously delinquent tax debt.” This $50,000 threshold includes all penalties and interest that may be added on due to a taxpayer’s failure to satisfy a tax debt that is due and owing. However, the tax enforcement provisions regarding the cancelation of one’s passport can only be utilized after the IRS has filed a lien or a levy against the taxpayer. The Bill provides that if the provision passes, it will go into effect on the first day of 2016.

Many groups are likely to be effected by these harsh potential new penalties. However, few groups are likely to be as affected as the 8 million strong American expatriates already grappling with FATCA and other offshore account compliance initiatives. Facing FATCA or other tax penalties and failing to address the matter before January 1st could lead to dire circumstances for expats due to potential passport cancelation. While the $50,000 threshold seems like it would be difficult to reach, penalties and interest can add up much more quickly than the average taxpayer would imagine.

IRS File Drawer Label Isolated on a White Background.
No taxpayer wants to receive news of a tax deficiency, tax audit, or other bad news from the IRS; however, it may turn out that the only thing worse than receiving bad news from the IRS is not receiving notice that you need to take action to correct a past tax filing or past tax mistake. Almost invariably, the longer a taxpayer takes to fix his or her underpayment of tax or outstanding tax bill the greater the amount of interests and penalties he or she is likely to pay. Thus, while it may be painful to receive notice of a tax lien or other adverse action by the IRS, not receiving the notice in a timely manner is worse.

Unfortunately for more than 24,000 taxpayers, a report from the Treasury Inspector General’s Office shows that problems in the tax lien process do occur.

When Can the IRS File a Tax Lien & What is Its Impact?