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September 22, 2020


Where does an IRS dispute go after an agency audit or appeal?

After spending time going through the audit or appeal process with the nation’s taxing authority, Texas residents may not receive the desired outcome. They may think they do not have any other options, but that may not be the case. In fact, it may be possible to take an IRS dispute outside the agency. The question is what court would provide the best opportunity for a favorable outcome.

Most tax appeals are heard in the U.S. Tax Court. The primary advantage here is that the judge has expertise in tax law, which could simplify matters. Something to be aware of is that if your dispute involves less than $50,000, you could use a less formal process, but it does not provide you with the right to appeal the judge’s decision. You could also file for bankruptcy and ask the court to determine the validity of the tax and whether it can be discharged.

You may take your dispute to the U.S. District Court in your area, but you must pay all the tax in dispute and exhaust all IRS remedies first. You are essentially fighting for a refund when taking your claim to this type of court. However, you may have your case heard before a jury. Something to consider is that the judge may not have any expertise in tax law, which could complicate matters.

Determining the best place to take your IRS dispute is not always an easy process. It requires a thorough review of the circumstances, the actions that led to this point and an analysis of the applicable tax laws. For this reason, you would most likely be better off working with a Texas tax attorney experienced in litigation outside the agency. Doing so could increase your odds of achieving the best outcome possible to your dispute.