
Taxpayers and companies alike frequently encounter disputes with the IRS. When this occurs, they may need to take their case to court in order to find resolution.
BakerHostetler’s tax controversy and litigation team understands the complexities of litigation, providing clients with guidance to avoid or minimize unnecessary tax litigation at an early stage.
What is Tax Litigation?
Tax litigation may seem dull and abstract, but it encompasses an expansive set of legal proceedings related to disputes with the IRS. Since they can seize assets or levy bank accounts if they believe that someone owes them taxes, fighting back is essential if individuals and businesses want to safeguard their assets.
Which court your case belongs in depends on its nature and desired remedy, with an experienced attorney being invaluable in helping make this important choice.
Kostelanetz & Kantor helps clients facing both civil tax disputes as well as criminal investigations and prosecution by the IRS for tax evasion and other federal crimes. We have successfully negotiated numerous voluntary disclosures that reduce civil penalties for past violations while helping avoid criminal charges in many instances. When necessary, our firm also defends taxpayers in trials or appeals proceedings.
What is the Forum for Tax Litigation?
KJK tax litigators provide representation to individuals, corporations and other businesses involved in disputes with the Internal Revenue Service (IRS). Such conflicts typically begin through either an administrative appeal within the agency or tax audit that results in additional taxes being assessed on taxpayers; ultimately they have two options for challenge: through legal means or settlement negotiations.
When fighting the IRS, taxpayers’ choice of forum can have a dramatic effect on its outcome. Their forum choice depends on which jurisdictional statute governs their case (28 U.S.C 1346) as well as precedent set in similar cases brought before trial courts, appellate courts or even the Supreme Court.
Tax Court is an exclusive forum that exclusively hears federal tax cases, featuring judges with extensive legal practice experience. Trials at Tax Court typically don’t feature jurors and tend to feature shorter discovery periods than those conducted in District or Claims Court.
What are the Rules of Evidence in Tax Litigation?
Tax litigation relies heavily on civil trial law for evidence rules. Three main standards exist when it comes to gathering proof: preponderance of evidence, clear and convincing evidence and beyond reasonable doubt.
Taxpayers bear the initial burden of proof in any tax dispute with the IRS and must present enough evidence to demonstrate that their determination was incorrect or arbitrary. When deductions are at issue, however, first the IRS must present substantial proof that unreported income existed before shifting it back onto them.
Parties must typically stipulate all facts that do not fall under privilege that pertain to the controversy before the tribunal. Stipulations is binding unless found by the Tax Court as being made under duress or ignorance and could allow one party to withdraw it; any admission made will still stand against future disputes, however.
What are the Statutes of Limitations in Tax Litigation?
Statutes of limitations are laws which limit how long the government has to investigate and take legal action on tax-related matters, commonly referred to as penalties for noncompliance.
IRS auditors usually have three years to audit a return, although this time limit can be extended if there is sufficient cause. An active attempt to evade taxes – for instance placing identification earmarks on property or concealing or covering up assets through different strategies – could delay this auditing period for some time.
IRS collections usually take 10 years from when a tax assessment has been issued; however, in certain instances this period may be extended due to criminal prosecution of tax fraud.
Certain events can suspend the statute of limitations, such as being outside of the US or fleeing justice; this practice is known as tolling the statute. Another possible triggering event would be when one corporation merges or acquires another under certain tax systems that treat such deals as tax-free to both entities and shareholders alike.