A tax controversy is any dispute between a taxpayer and a taxing authority — most commonly the Internal Revenue Service, but also state departments of revenue. These disputes range from routine audits to collections matters involving liens, levies, and wage garnishments, to formal proceedings in the United States Tax Court or state administrative tribunals.

Tax controversies are stressful, and the stakes can be high. The IRS has broad powers to assess additional taxes, impose penalties, charge interest, and take collection action against a taxpayer's assets. A state taxing authority has similar powers. Having an attorney who understands both the substantive tax law and the procedural rules governing these disputes can make a significant difference in the outcome.

IRS Audits

An IRS audit is an examination of a taxpayer's returns for the purpose of verifying that the taxpayer correctly reported their income, deductions, and credits. Audits can be triggered by specific items on a return, by information received from third parties, by random selection, or by the IRS's statistical analysis of returns. Audits may be conducted by correspondence, at an IRS office, or in the field at the taxpayer's place of business.

The firm represents taxpayers in all types of IRS audits. Representation includes reviewing the taxpayer's returns and underlying records before the audit begins, preparing the taxpayer for the examination, responding to IRS information requests and document demands, attending audit conferences and meetings with the examiner, negotiating with the IRS to resolve disputed items, and advising the taxpayer on their rights and options at each stage of the process.

The goal in an audit is to resolve the examination with the least additional tax, penalties, and interest possible. This requires not just an understanding of the tax law, but also familiarity with the IRS's internal procedures, the examiner's authority to settle issues, and the practical dynamics of the audit process.

IRS Appeals

If an audit results in proposed adjustments that the taxpayer disagrees with, the taxpayer has the right to appeal to the IRS Office of Appeals before the assessment becomes final. The Appeals Office is an independent function within the IRS whose mission is to resolve disputes without litigation. Appeals officers have broad authority to settle cases based on the hazards of litigation — meaning they can consider not just what the law says, but what a court might do with the facts and legal arguments if the case were litigated.

The firm represents taxpayers in IRS Appeals proceedings. Effective representation at Appeals requires a thorough written protest that identifies the legal and factual issues, presents the taxpayer's arguments persuasively, and demonstrates a realistic understanding of the strengths and weaknesses of both sides. It also requires the ability to negotiate effectively with the Appeals officer, which in turn requires credibility and a demonstrated command of the tax law.

Tax Court Litigation

If a dispute cannot be resolved at the examination or Appeals level, the taxpayer may petition the United States Tax Court for a determination. Tax Court is the only forum where a taxpayer can challenge a proposed tax assessment without first paying the disputed amount. The firm represents taxpayers in Tax Court proceedings, including the preparation and filing of petitions, discovery, trial preparation, and trial.

Collections

When taxes are assessed and not paid, the IRS and state taxing authorities have powerful collection tools at their disposal, including federal tax liens, which attach to all of the taxpayer's property and rights to property; levies on bank accounts, wages, and other assets; seizure of property; and passport revocation for seriously delinquent taxpayers.

The firm assists taxpayers who are facing collection action. This may involve negotiating an installment agreement that allows the taxpayer to pay the liability over time, submitting an offer in compromise proposing to settle the liability for less than the full amount owed, requesting currently-not-collectible status when the taxpayer does not have the ability to pay, seeking the release of liens and levies, filing for innocent spouse relief when one spouse should not be held responsible for the other spouse's tax liability, and requesting penalty abatement when there is reasonable cause for the failure to file or pay.

Each of these options has specific eligibility requirements and procedural rules, and the IRS has significant discretion in deciding whether to accept the taxpayer's proposal. Effective representation in collections matters requires knowledge of the IRS's internal procedures and guidelines, including the Internal Revenue Manual provisions that govern Collection Division operations.

State Tax Controversies

The firm also represents taxpayers in disputes with the Mississippi Department of Revenue and other state taxing authorities. State tax controversies can involve income tax, sales and use tax, franchise tax, and other state-specific taxes. The administrative procedures, appeal rights, and substantive tax laws vary by state, and an attorney handling a state tax controversy needs to be familiar with the specific rules that apply in the relevant jurisdiction.

A Note on Scope

Tax controversy work ranges from small refund disputes to multi-million-dollar assessments. The firm focuses its tax controversy practice on matters that involve significant amounts, complex legal or factual issues, or the intersection of tax law with the firm's other areas of expertise — business operations, estate matters, and corporate governance. Taxpayers with straightforward compliance issues or small-dollar disputes may be better served by a tax preparation professional or an enrolled agent, and the firm is happy to provide referrals.

If you are facing a tax dispute with the IRS or a state taxing authority, the inquiry form is the best place to start.