Suing the IRS in US Tax Court without a lawyer

[Dispatch20]

After reading about somebody's ongoing issue with the IRS, I thought it might be worthwhile to have a thread on tax audits and what to do if you disagree with the audit findings. If you have a decent argument and believe the IRS is wrong, it is actually super easy to file a law suit in US Tax Court. It only costs like $60 and it's almost certain you'll never have to attend court. And you don't have to be a lawyer to be successful.

 

I went through this process a couple years back over a $9k disagreement in personal income tax owed. The end result was the IRS giving up and I paid $0. It was a worthwhile hassle that I'd recommend.

 

Anybody want to share any experiences? Any questions about it? If it isn't obvious, I'm not a lawyer and this isn't a law forum. But this might be interesting and informative.

[robinlsb]

Did it once and not only did I win, they had to pay me an additional 14K.

 

No audits since then, 1992:eek:

[Dispatch20]

Did it once and not only did I win, they had to pay me an additional 14K.

 

No audits since then, 1992:eek:

 

I wonder if they got burned so bad they decided they wouldn't ever try again.

 

 

Here's a couple assorted tidbits I learned:

 

• Never waste your time calling the IRS. Anybody you'll ever speak to on the phone at the IRS will be completely incompetent and poorly trained. Low wage government jobs are not filled with go-getters!
  

 

• If you disagree with an audit, the first step is bringing it to appeals. The appeals process is a good idea and it's free. If Appeals sides with the IRS, then you've lost nothing. In fact, if you skip Appeals and just file a lawsuit they kick it back to Appeals, anyways.
  

 

• The only competent people you'll find at the IRS are lawyers that either work for the IRS, or are contracted by the IRS. The IRS contracts with a ton of small lawyer offices around the country to handle all the law suits.
  

 

• If you sue the IRS, you will get to talk to an actual IRS lawyer to hear his or her reasoning. And they will listen to you and your reasoning. The IRS lawyers have the power to negotiate your tax bill and will do so based on the strength of your argument. I found IRS lawyer for my case to be completely reasonable and professional. He seemed to respect my research, evidence, and energy on the subject. IRS lawyers aren't vindictive, and they don't really care how much money the IRS takes in. Your case may be personal to you, but it isn't for them. If your case becomes more work than it's worth, then they won't fight it.
  

 

• "S Cases" are streamlined IRS law suits designed for regular people. In an actual court, non-lawyers get eaten alive. For example, in real court there are strict rules for introducing evidence. In an S Case in Tax Court, all the rules are very relaxed. It's like a fake court. I think you can even introduce evidence on the spot for the judge without introducing it beforehand. But keep in mind that you'll most likely never even get to court. That's expensive for the IRS, and they'd settle with you first unless you're talking $100k+ in dispute.
  

 

• Just because you get a court date and location does not mean you're going to court. Nearly all cases settle long before the court date.
  

 

• Tax law is complicated. Don't expect the IRS or the IRS lawyers to make the right initial call (especially not the grunt auditors). Be prepared to research tax cases, IRS internal memos, etc to build a case. In my case, the IRS lawyer that had practiced for decades was completely surprised to find the IRS internal memo that supported my position. Google is your friend. All the big case laws have analysis put online by reputable lawyers. They do this to build their reputation and win new clients. You can certainly use their case study analysis for your own benefit.
  

 

• In cases where the IRS completely disagrees with you and thinks the judge will disagree with your position, they will file a "motion for summary judgement". This means the judge will review the IRS's argument prior to your court case and make a decision. You're free to file a competing motion for the judge to consider. But for gray areas, the IRS lawyer may just try to compromise with you. Most cases are probably in the gray area of what's a legitimate deduction, and what it takes to document that deduction.
  

 

• The "burden of proof" is really odd for tax cases. In criminal court, the burden is on the prosecutor. In Tax Court, it's all over the place. This is a google-able topic.
  

Although stressful, it doesn't take a lot of effort to file the lawsuit and defend yourself. It's a few documents, and all of them have instructions and examples. The IRS will keep using the language of "court" to intimidate you into giving up, but again, 99+% of people will never see the courtroom.

 

So what's the downside? Fighting an audit may expose further tax liability than what they originally found. If you aren't at risk for that, then fight on. At the very least, you get to delay paying back the taxes (although interest would accumulate).

[GTEASER]

This is interesting.

[FLlegacy]

The only time I had cause to speak with the IRS, they were very helpful and explained the process for filing an amended return in detail. The gentleman I spoke with was very polite and was in no rush to get me off the phone. But I didn't owe any money so there may a different set of people for IRS debts.

[FJuan]

Never had an issue with IRS, I play by the rules since I'm a government employee. But, I can tell you how to win in Divorce court.

[Dispatch20]

The only time I had cause to speak with the IRS, they were very helpful and explained the process for filing an amended return in detail. The gentleman I spoke with was very polite and was in no rush to get me off the phone. But I didn't owe any money so there may a different set of people for IRS debts.

 

As long as you are just asking for run-of-the-mill stuff like how to file a 1040X, then I suppose they can handle it OK. But if you want to hear any reasoning on why an auditor made certain decisions, you'll only get something unhelpful like "that deduction is not allowed". An answer like that isn't helpful, and is often incorrect. Our tax code is so complicated that the IRS often can't keep it straight.

 

In any case, I did have seriously long wait times (>30-45 minutes) to get connected to a human to have any sort of a discussion. The long delays have gotten worse over the years. One time they kept sending me between two different departments where each one kept trying to convince me that the other department was responsible for handling it.

 

Never had an issue with IRS, I play by the rules since I'm a government employee. But, I can tell you how to win in Divorce court.

 

I'll make a note of that, haha.

 

In all seriousness, suing the IRS is for when the IRS doesn't play by the rules. It's not about cheating taxes or being shady. Big government doesn't always care whether it's being lawful, moral, or otherwise correct. When you follow the laws and they still try to strong-arm you, then it might be time to put up a legal fight.