Tax Disputes 101: 5 Things To Keep In Mind

Who hasn't heard of Uncle Sam's bastard stepchild, better known as the IRS? The IRS can get nasty when it comes to getting "your" money, which they see as rightfully theirs. And you better believe that they have a lot of tools to get your money.

They can seize your home, cash, or even garnish your wages. But that doesn't mean you're helpless. There are many tools available to you as a taxpayer, you can read about them below.
If you are in a dispute with the IRS or you're anticipating one, this 5-point checklist below is loaded with priceless information that will prove useful in disputes with the IRS.

1. Begin With the Appeals Process.

If you disagree with the decision of an IRS employee at any time during the collection process, you may ask that employee’s manager to review your case.

If you disagree with the manager’s decision, you have the right to file a written appeal under the Collection Appeals Program. You can appeal collection actions such as liens, levies of bank accounts or garnishment of wages.

You are also entitled to a Collection Due Process Hearing where you can challenge the IRS’s determination of tax owed. Learn more about the Appeals Process from our other article on surviving tax disputes.

2. Take the Dispute to U.S. Tax Court.

If you are unsuccessful in the IRS appeals process, you may file a petition in U.S. Tax Court to challenge the amount due. This is where you want a whip-smart attorney. Even if you're as smart as a lawyer, the old saying that the man who represents himself has a fool for a client. It's true. Stay in your lane.

3. Explore Installment Agreement Options.

The IRS's version of a payment plan, and yes you have to pay interest until you've paid them back everything you owe.

Also, if you owe the IRS over $50,000, then you must complete IRS form 9465. This form lists all of your assets, income, and debt.

4. Understand and Ask For an Offer in Compromise.

Sometimes the IRS is willing to compromise. You may make a deal with the IRS under what is called an offer-in-compromise. Under an Offer in Compromise, you agree to pay a certain amount to the IRS as a settlement for all the money they say you owe.
There are three circumstances in which the IRS will accept an Offer in Compromise:

  • First, if there is a doubt as to whether you are truly liable for the tax.
  • Second, if there is doubt as to whether you are actually able to pay the IRS back.
  • Third, an offer may be accepted if the offer is in the best interest of the IRS or due to economic hardship or special circumstances of the taxpayer.

Note: Attorneys are experts at persuading people of doubt and what's in your best interest. That's what we're here for.

Office of Taxpayer Advocate. You Really Do Have Friends At The IRS

If you feel at any time during the "tax collection process" that the IRS has been uncooperative, you, as a taxpayer, may receive the assistance of the Office of The Taxpayer Advocate. Most of the time we're being a little facetious when we talk about our friends at the IRS. But in this case, these are your actual friends at the IRS.

The Taxpayer Advocate is an independent office within the IRS but it is their responsibility to assist the taxpayer in dealing with other offices within the IRS.

The Taxpayer Advocate can help give you great advice on how to resolve your tax problem. They can also be extremely helpful in getting responses to requests for information and in obtaining decisions on an "Offer In Compromise" or appeals.

Bottom Line: Tax Disputes Can Be Complex, So Get Help.

If you don't know what you're doing during a tax dispute with the IRS, you can end up in serious financial trouble. You will definitely want the help of an attorney or certified public accountant if the IRS starts applying pressure on you.

Fortunately, we've got your back! Royal Legal Solutions' experienced tax attorneys can help you handle your dispute, or even better, prevent one from happening in the first place. When you take action ahead of time, you can dodge the fight with Uncle Sam altogether. Contact us today for your personalized tax consultation.

Last Updated: 
November 6, 2017

Scott Royal Smith is an asset protection attorney and long-time real estate investor. He's on a mission to help fellow investors free their time, protect their assets, and create lasting wealth.

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