Sophisticated Representation in U.S. Tax Court, District Court and IRS Appeals

Tax Controversy & Litigation involves resolving complex disputes between taxpayers and taxing authorities through administrative appeals or judicial proceedings. Below are answers to the most common questions regarding these high-stakes legal matters.

General Tax Controversy FAQ

What is a "tax controversy"?

A tax controversy is a legal dispute between a taxpayer (individual or business) and a government tax agency, such as the IRS or a state department of taxation. These disputes typically arise from disagreements over audits, tax liabilities, penalties, or collection actions like liens and levies.

What are the most common causes of tax litigation?

Litigation often stems from the following issues:

• Accuracy-Related Penalties: Disputes over fines issued for underpayment.

• Unreported Income: Disagreements regarding wages, debt cancellation, or property sales.

• Business Expenses: Issues proving the legitimacy of trade or business deductions.

• Employment Status: Conflicts over whether workers are classified as employees or contractors.

• Summons Enforcement: When the IRS goes to court to force a taxpayer to produce records.

How can I resolve a dispute without going to court?

Most cases are settled during the administrative appeal process. The IRS Office of Appeals acts as an independent body to resolve disputes fairly without the need for a trial. If you receive a notice of proposed changes, you can file a formal written protest to move your case to Appeals.

U.S. Tax Court & Litigation FAQ

What is a Statutory Notice of Deficiency?

Often called a "90-day letter" or a "ticket to Tax Court," this is a formal legal notice issued by the IRS stating they intend to assess additional tax. Once received, you have exactly 90 days (or 150 days if addressed outside the U.S.) to file a petition with the U.S. Tax Court.

Do I have to pay the tax before going to Tax Court?

No. The U.S. Tax Court is a "prepayment forum," meaning you can challenge the IRS's findings without paying the disputed amount first. This is a major advantage for taxpayers compared to U.S. District Court or the Court of Federal Claims, where you must typically pay the tax in full and then sue for a refund.

What happens after a petition is filed in Tax Court?

Once a case is docketed, several stages occur:

• The Answer: IRS counsel files a response to your petition, admitting or denying your statements.

• Discovery: Parties engage in "Branerton" practice—an informal exchange of documents and information—followed by formal discovery if needed.

• Stipulations: Both sides are required to agree (stipulate) in writing to all facts and documents that are not in dispute.

• Trial: If a settlement isn't reached, a bench trial is held before a Tax Court judge.

Collection Due Process (CDP) FAQ

What is a Collection Due Process (CDP) hearing?

A CDP hearing is a procedural safeguard that allows you to pause IRS collection activities (like levies or liens) while an independent settlement officer reviews your case. You generally have 30 days from the date of a collection notice to request this hearing.

What can I achieve during a CDP hearing?

During the hearing, you can propose collection alternatives, such as:

• Installment Agreements: A monthly payment plan.

• Offer in Compromise (OIC): Settling the debt for less than the full amount.

• Innocent Spouse Relief: Claiming you should not be held liable for a spouse's tax errors.

• Penalty Abatement: Arguing for a reduction of interest or penalties based on "reasonable cause".