We will sometimes have clients come to us and declare "I want to take my case to Tax Court!" Often we need to stop the runaway train they're on and convince them otherwise. There are many other stops on the way to Tax Court, and if you do end up there it may not be the best solution to your tax debt.
Why Tax Court?
What kinds of things can you appeal in Tax Court?
- Filing of a lien
- Collections – If the IRS is filing an improper levy or if they do not agree with your reasonable collection alternative (i.e. Installment Agreement, Currently Not Collectible)
- Assessments
If you receive a 90-day letter from the IRS, you literally have just 90 days (from the date on the notice, not the date you received it) to respond to petition. If you ignore the letter, you are basically saying you agree with the IRS decision and after 90 days you can no longer appeal. So if you're going to act, act fast… and count your 90 days correctly.
What to do
If you're doing tax law correctly, you can avoid Tax Court. Your case will first be sent to the Office of Appeals, at which point you can try to work out a settlement with the IRS. Some options available for negotiating with the IRS:
- Offer in Compromise
- Partial Payment Plans
- Offshore Disclosure Programs
- Innocent Spouse Relief
- Currently Non Collectible Status
- Partial Payment Installment Agreement (PPIA)
- You can also ask the Taxpayer's Advocate Service for help
- FBAR penalties
Before deciding to take a case to Tax Court, every single other option should be exhausted. You're dealing with the IRS here, so you need to be on point. Your documentation should be literally perfect, and you should be telling the IRS your entire story — don't just rely on numbers in your fight.
Seriously. Always exhaust your administrative remedies.
If you do exhaust all of your options and decide to go to tax court, know that you're fighting one of the biggest bullies out there. And the IRS won't just push you around, they're smart, too. They will kick your butt on a technicality. It's important to note that an unpaid tax debt continues to accrue interest the entire time you are petitioning and in tax court. Also, if you file a tax court petition you stop the clock on the 10-year collection statue expiration date on your tax debt.
Tax protester arguments – Our "What not to do" section
Tax court is no place to challenge the law, it is not their job to decide if a law is "fair". The IRS takes what they call "frivolous" arguments very seriously. Some examples of what they consider to be "frivolous":
- The filing of a tax return is voluntary
- Taxpayers can reduce their federal income tax by filing a zero return
- A taxpayer is not a “person” as defined by the Internal Revenue Code, thus is not subject to the federal income tax laws
- Taxpayers are entitled to a refund of the Social Security taxes paid over their lifetime
- Any arguments related to the Fifth, Thirteenth, or Sixteenth amendments
The IRS lists 40 arguments on their website, with a follow up that says: "This document is not intended to provide an exhaustive list of frivolous tax arguments. Merely because a frivolous argument is not included in this document does not mean that it is not frivolous".
There is no arguing with the IRS; their reply is "it's a frivolous argument because we say it's frivolous". My thought is — if you're so convinced you're right, could you possibly give an actual reason? If you're so sure, shouldn't it be easy for you to explain the law and how you're correct?
The IRS imposes strict penalties on anyone that goes to tax court and tries to bring in a frivolous argument, and there is always the possibility of facing criminal prosecution. They offer a list of cases they've won and the penalties imposed on individuals. Irwin Schiff, a famous American tax protester, died in prison at the age of 87. He was terminally ill, legally blind, and was shackled to his hospital bed at the time of his death.
Tax Court Representation
Legal representation is highly recommended if you have an IRS tax problem. The professionals can first look at your case and decide what the best options are. Anyone you hire should first ask, "Are you really sure you want to go to Tax Court?"
If you do go to tax court, some people ask "Should I represent myself?" If you do, you need to remember that the burden of proof lies solely on your shoulders to prove that the IRS is wrong. That's a big fish to fry.
Lastly, people ask "Do I have a chance of winning in Tax Court?" The fact of the matter is the IRS has already reviewed your case several times; 90% of cases are settled before ever going to actual court, and if they do go most end up ruling in favor of the IRS.
The good news is most tax debt problems can actually be solved! It's better to address your IRS issues than to ignore them. We've said it before and we'll say it again and again — every situation can be made better. Work with someone who wants to make your tax debt go away forever. If you have a tax issue you need assistance with, contact us to schedule a free, confidential consultation. Call us at 888-727-8796 or email info@irsmedic.com.
