The United States federal tax system is perhaps one of the most complicated, ever-evolving systems in the country. The State of Nevada, of course, has its own tax system. Both have ramifications for individuals and businesses. With that comes extreme complexity, yielding plenty of room for tax controversies. The attorneys at JEFFREY BURR navigate these complexities every day, helping clients with very important issues to best possible outcomes. Tax controversy and resolution involve a number of topics. Here are some of the most common, all described in this section.
IRS Audits – The IRS has a significant amount of power to inspect the books and records of taxpayers to determine and assess tax liabilities. The IRS auditor represents the government, and it is their job to propose additional assessments of tax and potentially penalties. No matter how friendly they appear to be, the auditor is neither neutral nor in your corner.
Types of IRS Audits
Typically, an audit begins when a taxpayer receives a notice from the IRS that they have been selected for an audit. There are different types of audits, including: correspondence audits, office audits, and field audits. In a field audit, the auditor will typically send an information document request to the taxpayer. These document request forms can be exhaustive and can request, among other things, the following items:
The tax attorneys at JEFFREY BURR have represented hundreds of taxpayers before IRS auditors. Contact us today to see how we can help you.
Offer in Compromise - If you are unable to pay your total tax liability, you may be able to settle your tax debt for less than the total amount that you owe to the IRS. The IRS allows taxpayers to submit an Offer in Compromise to settle their tax debts. The tax attorneys at JEFFREY BURR have helped their clients save tens of millions of dollars in taxes through successful offers in compromise.
You may qualify based on an analysis of your income and the equity in your assets, which is used to calculate the reasonable collection potential (RCP). An Offer in Compromise will stop all IRS collection actions such as an IRS levy or wage garnishment.
There are three (3) grounds on which your IRS Offer in Compromise can be accepted:
Is IRS Threatening to Levy Your Wages and Assets?
Contact a tax attorney at our Las Vegas, Nevada, law firm. We can negotiate with the IRS on your behalf.
Taxpayers unable to resolve their tax matters with IRS auditors have the option to litigate their case in a number of federal courts, each with different requirements and attributes. The available forums are the United States Tax Court, the United States District Courts, the United States Bankruptcy Court and the United States Court of Claims. Individual taxpayers rarely use the United States Court of Claims.
The Las Vegas area tax attorneys of JEFFREY BURR assist individuals and businesses in Nevada and elsewhere with tax litigation, settlements and appeals.
United States Tax Court
Generally, most tax issues are presented in the United States Tax Court because it is a prepayment forum, meaning that taxpayers can initiate a tax case before paying the tax liability. A case generally begins after the taxpayer has received a Notice of Deficiency from the IRS and the taxpayer petitions the court. Taxpayers must do so within 90 days (150 days if the taxpayer is not a resident of the U.S.) of the IRS mailing date on the deficiency notice. The court may also hear cases primarily involving collection actions (liens and levies) and IRS denials of taxpayer requests for innocent spouse relief, offers in compromise, penalty abatements or other collection alternatives. These cases can be commenced after the taxpayer has exhausted all IRS Appeal rights and has received a Notice of Determination.
Unlike other forums, Tax Court judges have special expertise in federal tax laws and are employed to interpret tax laws and regulations to ensure that taxpayers are taxed fairly by the IRS. Trials are conducted before one judge and without a jury.
Often, U.S. Tax Court cases are settled by mutual agreement between the taxpayer and the IRS Appeals Officer or IRS attorneys prior to trial. If a trial is conducted, the judge will issue a report setting forth both findings of fact and an opinion. Decisions of the Tax Court can be appealed to the United States Court of Appeals so long as the case is not designated by the taxpayer to be a small Tax Court case.
United States District Court
Unlike the U.S. Tax Court, the U.S. District Court is not a prepayment forum, meaning that taxpayers must first pay the disputed amount and then request a refund from the IRS. After receiving a denial of the taxpayer’s refund request and exhausting IRS administrative remedies, the taxpayer can then file a suit in the U.S. District Court. Unlike the U.S. Tax Court, taxpayers are then entitled to a jury trial. While there is no minimum amount of disputed tax to file suit in the U.S. District Court, the cost and complexity of a federal District Court often limit U.S. District Court tax actions to large cases.
United States Bankruptcy Court
The remedies available to a taxpayer in Bankruptcy Court vary depending on whether the taxpayer’s case is a Chapter 7, Chapter 11 or Chapter 13 case. Courts can, however, decide a number of disputes between the IRS and the taxpayer. More specifically, the courts often determine the amount or validity of a deficiency claim or tax liens, and the taxpayer’s right to a discharge of tax liabilities asserted by the IRS. As with the U.S. Tax Court, actions in the Bankruptcy Court can commence prior to making payment of the liability.
We welcome you to contact the tax attorneys at JEFFREY BURR with regard to a tax litigation matter. With Nevada offices in Las Vegas and Henderson, we serve clients throughout the State, as well as those located throughout the country.
The IRS may file a lien or levy against a business or individual based upon a tax liability of a different entity via the alter ego or successor liability theories. If the IRS has threatened to assert a tax liability against your business based on alter ego or successor liability theories, we can offer expert guidance to protect your peace of mind and livelihood.
Alter Ego – The IRS may attempt to collect a tax liability from the taxpayer’s “alter ego.” In an alter ego situation, there can be such a unity of ownership and interest between the taxpayer and a different entity such that the entity is not considered a genuine, separate entity. An alter ego is an entity that is legally distinct from the taxpayer, but is so intermixed with the taxpayer that their affairs (and assets) are not readily separable. As a result, the IRS can seek to assert that the new entity should be considered the same as the old entity or taxpayer for collection purposes. The IRS could attempt to consider all of the assets owned by the alter ego as a source from which to collect the taxpayer’s tax liability. The IRS is generally required to seek Area Counsel approval before instituting administrative collection actions against the alter ego.
Successor Liability - Generally, a corporation that acquires the assets of another corporation is not liable for the debts of the transferor corporation. However, this general rule is subject to certain exceptions. When the surviving corporation is the result of a formal merger or consolidation of two corporations, many state corporate merger and consolidation statutes state that a surviving corporation is liable for the debts of a predecessor corporation. In these cases, the surviving corporation can be held liable for the tax debts of the predecessor corporation as a successor in interest. Successor liability may apply in the following circumstances:
Under the successor liability theory, a taxpayer’s liability may be collected from the successor in interest via lien and levy or installment agreement using administrative collection procedures. The IRS might also request that the successor establish an installment agreement to make monthly payments toward the prior entity’s tax liability. The successor corporation steps into the shoes of the transferor corporation and has all of the rights and remedies that the transferor corporation held. A new notice of federal tax lien against the successor naming the successor corporation might be filed by the IRS to preserve its priority over other creditors. In these circumstances the taxpayer can request an appeal to prevent the successor theory.
The ten-year statute of limitations for collection under IRC § 6502 for the original corporation’s tax liability applies to the successor corporation. If it appears that successor liability may apply, the IRS must consult Area Counsel for approval before taking any collection action against the alleged successor corporation. It is important to contact a tax attorney to discuss your appeal options if you disagree with the liability.
If an Offer in Compromise is not the best solution in resolving your tax debt, a Penalty Abatement may be a possible alternative.
Call a Nevada tax attorney at JEFFREY BURR today to discuss your legal options.