The IRS often attempts to collect, or does collect, taxes from individuals who do not really owe the taxes. For instance, perhaps you moved and did not notify the IRS of your new address. The IRS would have sent a Notice of Deficiency to your last known address, but if the notice was not forwarded to your new address, you would not have found out about it until after the 90-day period expired and could not have filed a tax court petition. In such a situation you can bring suit against the U.S. government for a refund of any tax improperly assessed or collected.
Before filing a lawsuit, you must give the IRS an opportunity to correct the problem. In most cases, this means that you must file a claim for refund and then wait six months before filing a suit, unless the IRS rejects the claim sooner than six months. Under the circumstances, you have two years to file a suit after the IRS rejects the claim.
After you file a refund suit, the government attorney (in the Justice Department) will consider whether or not to settle the case. Most of the time the government attorney will consider the likelihood that you will win (and maybe set a precedent for all other taxpayers) when he or she decides how much to offer you to end the case.
The Advantages Of Filing A Refund Suit
There are several advantages to filing a suit for a refund:
- A jury trial is possible.
- Government attorneys are not IRS attorneys and may not understand the tax laws as well as IRS attorneys would.
- You can get the IRS to pay your attorney fees and court costs if you win at trial.
- There is a good possibility that the case will be settled after you file suit.
Some disadvantages of filing a suit for a refund include the following:
- You must pay the tax (or a portion of the tax) before filing suit.
- You must exhaust your administrative remedies (Form 843 claim) within the IRS before filing suit.
- You will often need to hire a competent tax attorney to handle your case.
Levins Tax Law, LLC, is available for evening and weekend appointments. Our firm accepts American Express, Visa and MasterCard. Besides Boston, we also have an office in Framingham, Massachusetts. To schedule a no-obligation confidential consultation with an experienced tax lawyer, contact Levins Tax Law, LLC, call 508-435-0118 or 888-333-9501.