Tax controversy is defined as an issue involving the proper tax treatment of a transaction or event. The most common types of tax controversies are disputes over whether an activity or event should be taxed, how much it should be taxed, and whether certain allowable deductions.
This article talks about what you need to do if you end up in such a controversy. But before getting into that, let’s understand how a tax controversy arises.
Reasons Behind a Tax Controversy
Tax controversies can arise in many different contexts:
- If you have received a Notice of Deficiency from the Internal Revenue Service (IRS), you may need to defend your position on appeal before the Tax Court. This can involve both administrative proceedings and litigation.
- If the IRS has audited you in connection with your federal income taxes for multiple years, your case may be considered too “complex” for an audit resolution conference with an IRS agent who does not specialize in tax law; instead, it will likely be assigned to one or more revenue agents who specialize in tax law issues, but who will not participate directly in any negotiations between you and the IRS. They will write up their findings based on information provided by both sides during interviews and correspondence exchanges; once completed, they forward their report(s) back up into management channels where decisions may ultimately make regarding future enforcement actions against someone found liable after such proceedings take place due to insufficient evidence showing them innocent under current laws governing such matters.”
Whatever the reason, if you are in the midst of tax controversy, here’s what you need to do.
Step 1: Decide Whether You’re Going to Face the IRS on Your Own or Seek Professional Help
When it comes to tax controversies, there are many things you can do on your own. You may not be able to get everything taken care of yourself, but many disputes can be resolved by filing an amended return or otherwise completing a form or letter with the IRS.
However, if you are right in your position and want to fight back, this is where professional assistance becomes valuable. An experienced tax controversy lawyer or tax resolution lawyer in Washington, DC, will know what types of tactics might work best in your dispute and how much time and money it might take to resolve them.
Step 2: Get Organized
The IRS is a government agency, and they have their own rules about how to do things. They also have the power to enforce those rules. As an individual taxpayer, you don’t have any control over what those rules are or how strictly the IRS chooses to implement them, but there are some things that you can do if you end up in a tax controversy with them:
- Keep records of all your income and expenses. The government may ask for proof either by asking for receipts or other documentation (for example, social security card). Also, make sure your accounting is accurate! Keeping good records will go far toward helping resolve any issues when it comes time for negotiations with the IRS.
- Keep copies of all correspondence with the tax authorities (IRS). This includes letters from them plus anything else written on paper that relates directly concerns taxes, such as employment contracts or loan applications where employers/lenders request taxes paid to be withheld from wages/borrowed money before they pay out wages/funds deposited into savings accounts instead etcetera; even though these aren’t directly related specifically to taxes themselves it’s still important because they could potentially impact whether someone owes back taxes later down the road which means additional penalties collected too! Be sure to keep paper copies and digital versions stored somewhere safe if something happens like getting lost somehow during this process.”
Step 3: Hire a Tax Attorney or Accountant Who Can Help You Negotiate With the IRS
If you’ve been in contact with the IRS and have sent a notice of intent to levy, the next step is to hire a tax controversy lawyer or accountant. If you’re not sure whether you need this, consider these questions:
- Is it possible that your tax dispute is big enough for an attorney or accountant to take?
- Are there any negotiations that could be made between you and the IRS? These can include settlement offers, payment plans, partial payments and more. Most people think that their only option is to pay everything at once—but if your situation allows for it, there may be other options available through negotiation. An excellent attorney will help guide you through this process to consider all possible outcomes before deciding how much money (and when) should be paid back to settle things out of court.
Step 4: Safely Pay What You Owe So You Can Move On
The IRS will not negotiate with you. Don’t try to make a deal with the IRS or get out of paying what you owe. Don’t ask your friends or family members to help you pay it off. It’s best to take care of this yourself and move on.
If the amount owed is large enough, options may be available to help reduce or eliminate interest, penalties and other taxes owed in Washington, DC. These include:
- Offers In Compromise (OIC) – an agreement between the taxpayer and IRS for settlement of outstanding debts for less than full payment of those amounts; however, no offer will be accepted unless all federal income tax returns have been filed with all applicable information included;
- Installment Agreements – requires fully paying off past due balances over time through monthly payments; however, no installment agreement will be accepted unless all federal income tax returns have been filed with all applicable information included;
If you want to resolve your tax controversy as quickly and efficiently as possible, you need to hire a good tax attorney for help. Tax attorneys can help you avoid tax liens, garnishments and even criminal charges related to tax fraud.
The bottom line is that should you find in tax controversy, it is best to hire a tax resolution lawyer in Washington DC. You’ll need to take the proper steps to resolve the dispute and leave nothing to chance. A diligent approach will help you minimize the cost of any fines or litigations related to your tax controversies, while an imprecise one could be costly.
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