Jeremy Kaplan
Having a dispute with the Internal Revenue Service (IRS) seems ill advised and most people feel like they will lose even if they try. However, there are numerous cases of people who have taken their disputes with the IRS up with the court system.
There is a strict procedure how you can get your case heard before the court. Consult a tax attorney such as Brunoro Law to find out the exact procedure and requirements. A large percentage of these cases end up resolved through other methods even before they can reach the court. However, there are plenty of cases which do end up in court and they largely revolve around a few issues.
Offshore Accounts
People can have accounts in other countries for any number of reasons, but if they fail to report them to the government, that is considered illegal. If you are discovered hiding offshore accounts, you are liable for criminal charges which may include prison time and a hefty fine.
Fortunately, the IRS has a program which enables you to disclose previously hidden accounts without fear of prosecution. This program is called Offshore Voluntary Disclosure Program or OVDP for short. You can learn more about this program here.Just be warned, the program is set to expire this fall and there are no indications that it will be renewed, so this may be your last chance to disclose your offshore accounts freely.
Accuracy Issues
If you have grossly underestimated how much you owe for tax this year, the IRS may take notice and in certain situations, they may choose to file charges. The majority of these cases this year were resolved more or less in the favor of the IRS. Only 15% of all cases were fully in favor of the taxpayer.
These are the most commonly settled cases, which means that you are given another chance to settle the case before the judge decides about your case.
Failure to File
A lot of people either forget about tax season or simply don’t start gathering all the necessary paperwork on time. This results in late submissions, or failure to file altogether which may result in a legal process filed against you. There are very few cases where this failure to file or to file on time are justified, which is why the IRS wins a staggering 80-85% of the times.
Charitable Donations
A lot of people list some contributions to charitable organizations as a reason for tax deductions. However, the IRS often has some complaints about the deductions and if the sum of money is substantial enough, they are not shy to go to court about it.
There are a few issues which IRS lists as the cause for litigation, the most important being whether the charitable organization is qualified for deductions, so make sure that you check that before you donate. Another issue they often cite is whether the amount you donated is sufficient to trigger the deduction and similar issues. Make sure that you keep a good record about your donation to ensure your success in court.
Frivolous Cases
These include people who refuse to pay taxes due to their belief that taxation is illegal and similar issues. IRS is very strict in these cases, probably to ensure that the issue serves as a deterrent to others who might try to avoid paying taxes.
Even though there were some taxpayers who were successful with these kinds of lawsuits, they are almost invariantly warned that continuing this behavior will result in repeated litigation and that they might not be so successful the next time.
Tax related litigation is never a pleasant affair, but if you feel like you are right, lawyer up and good luck.
