Did you receive a nasty tax bill after your IRS audit? Have you been served with an IRS notice of deficiency? You may not agree with the bill. You may also not be able to afford the payment. What should you do? Going to the US Tax Court is always an option.
US Tax Court
The US Tax Court is a special federal court. It only decides tax cases between taxpayers and the IRS. The judges travel around the country to hear cases. They're experts in tax law.
Is the IRS claiming you owe $50,000 or less in any particular tax year? You can file an appeal of your audit results with the Small Cases Division of the US Tax Court. It's similar to a small claims court. It doesn't matter if the entire tax amount is over $50,000. The case can be heard as long as it's not more than $50,000 in a single year.
Did you lose your appeal in the Small Cases Division? You can't appeal any further. You're stuck with the amount the court says you owe. However, most tax court cases are settled without even having to go to a trial. Many taxpayers walk away with substantial reductions in the amount of taxes, interest and penalties owed.
Filing an Appeal
The best place to find instructions and forms for filing an appeal are found on the US Tax Court web site. There's a $60 filing fee. It must be sent in at the same time as the filing paperwork.
You must file the appeal paperwork with the US 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 US Tax Court in every state.
It's a good idea to be as specific as possible in your paperwork. Explain in detail about why you disagree with the IRS's claim that you owe money.
You'll have the opportunity to try to settle your case ahead of time. There are many more cases filed than the IRS has legal staff to take to trial. It's best to approach any settlement talks with an eye toward specific issues. This method is better than trying to negotiate an overall reduction in the amount owed.
The hearings in the US Tax Court usually don't last very long. You'll have the chance to tell a judge your side of the story. The burden of proof is on you to prove that the determination of the IRS is incorrect. You can bring financial paperwork to back up your position. You can also call witnesses.
You'll receive the opinion in the mail. You may appeal the decision in a regular tax case to one of the US Courts of Appeal. You must file a notice of appeal within 90 days of the decision.
Questions for Your Attorney
- How do I file an appeal of a tax audit?
- Should I have a lawyer with me when I go to court to appeal a tax audit?
- Is there any way to get out of an audit once I have been chosen?