Sherrie Bennett
So you got a nasty tax bill after your IRS audit and you've been served with an IRS notice of deficiency demanding a payment that you can't afford and don't agree with. What now? Federal Tax Court is always an option.
If the IRS claims you owe $50,000 or less in any particular tax year, you can file an appeal of your audit results with the "small claims" division of Federal Tax Court.
If you lose your appeal to Small Cases Tax Court, you can't appeal any further and are stuck with the amount the Court says you owe. But most tax court cases are settled without even having to go to a trial, and many taxpayers walk away with substantial reductions in the amount of taxes, interest and penalties owed.
Filing An Appeal
The instructions and forms for filing an appeal in Tax Court are available in a "Petition Kit."
There is a $60 filing fee, which must be sent in at the same time as the filing paperwork.
You must file the appeal paperwork with the Tax Court within 90 days of the date the IRS sent the Notice of Deficiency to you.
You'll get to choose the IRS court where you'd like the trial to take place. There's at least one Federal Tax Court in every state.
It's a good idea to be as specific as possible in your paperwork about why you disagree with the IRS's claim that you owe money.
As there are many more cases filed than the IRS has legal staff to take to trial, you'll have the opportunity to try to settle your case ahead of time. It's best to approach any settlement talks with an eye toward specific issues, rather than trying to negotiate an overall reduction in the amount owed.
Trial Procedures
If you end up actually going to court, you'll be pleasantly surprised to see that Federal Tax Court is much like small claims court. The hearings usually don't last very long, and you'll have the chance to tell a judge your side of the story and give the judge the financial paperwork backing up your position.
There may be other alternatives, such as federal court, available to you. You should always consider hiring an attorney or certified public accountant to represent you.