Resolving Tax Disputes

Taxpayers can resolve their small tax disputes in tax court, a subdivision of small claims court, which are part of each state’s court system. Federal tax court handles large cases such as fraud on an income tax report or negligence on an income tax report but the small tax disputes are heard by the small case division of federal tax court. If a taxpayer owes less than $50,000 in taxes for one year than the IRS will deem your case as a small case and it will be identified with a S. Even if the IRS has audited you for three straight years and each year you owe $50,000 for a total of $150,000, your case will still be considered a small tax dispute case. The majority of small tax dispute cases do not even go to trial because an attorney for the IRS and the taxpayer’s attorney will meet beforehand to discuss some sort of settlement. The IRS claims that more than half of the people filing for an S case wind up receiving some sort of tax reduction for what the IRS claims the taxpayer actually owes. If an S case does head to court it is not as intimidating as people think. The trial will last no more than one or two hours at a time but be sure to have an attorney present to represent you in your case. Small tax disputes that are tried in court are much like a small claims court proceeding. Each side will present their evidence and tell their version of the story to the judge, who will determine who wins the case and who loses.

Not all small tax cases must be heard in small tax court. The taxpayer has the decision as to where they would like their dispute heard, as long as it fits the requirement for small tax court, which is $50,000 or less. When preparing to have a small tax dispute heard in small tax court, the taxpayer should make sure that all of the proper and required forms are filled out correctly so that the process is completed in a swift manner. The forms are as follows:

1. A copy of the Notice of Deficiency or Notice of Determination the IRS sent you;
2. Your Statement of Taxpayer Identification Number (Form 4);
3. The Request for Place of Trial (Form 5); and
4. The $60 filing fee, payable by check, money order, or other draft, to the "Clerk, United

States Tax Court"; or, if applicable, the fee waiver form.

The above list of forms that are needed are the only forms that can be used to have the case heard and hopefully judged in the favor of the taxpayer. As mentioned earlier, not all small tax disputes are heard in small tax court because most cases are settled before they even reach the court. Attorneys from the IRS will meet with the taxpayer’s attorneys to determine a settlement or discuss how the court proceedings will occur.

• If you are in the middle of a tax dispute, consult with a tax attorney in your area today. They know the law best and can help solve your case, and get the best possible outcome.