What is Tax Litigation?

tax litigationThe term “tax litigation” can be a dry business term—unless it applies to you.


If you are drawn into a tax controversy with a state, federal, or foreign agency, the process and definition of tax litigation can quickly become more vivid. A “tax controversy” is itself a term used to describe an area of legal practice or a single event that involves a dispute between taxpayers, non-profit organizations, businesses, and tax agencies like the Internal Revenue Service (IRS). 


Tax litigation can involve civil matters or criminal tax matters and can be heard in venues that include the U.S. Tax Court, U.S. District Court, and U.S. Bankruptcy Court. As could be expected, tax disputes arise when an agency believes tax is owed on some level and a taxpayer or company may feel otherwise. As well, a tax controversy can ensue when a taxpayer believes a refund is owed.


In many cases, the closest a taxpayer will come to tax litigation is an IRS civil audit. A civil audit is announced via a letter from the IRS. There are different levels of audit which may result in a finding that additional tax is owed. If the taxpayer protests, there is a process to appeal the decision which may ultimately reach the U.S. Tax Court. At this time, the IRS conducts most of its civil audits by mail, rather than by in-person interview. 


An IRS criminal tax investigation may start out as a civil audit. For a number of reasons, during the audit, the civil IRS examiner may alert a criminal tax investigator with IRS: CI, the criminal investigation branch of the IRS.  The matter undergoes internal review at the IRS before a criminal investigation is initiated. In a federal case, a grand jury may be empaneled to determine if there is cause to indict the individual against whom allegations have been developed. A grand jury can subpoena additional documents or testimony from witnesses, without the defendant present. 


Tax litigation is the process by which questions involving civil tax disputes or criminal tax matters are presented, reviewed, and decided in the appropriate venue. Because of the complexity of tax law, especially in the face of a criminal tax charge, speaking with an experienced criminal defense tax attorney can help you respond to de-escalate potential criminal charges, or help you best understand your posture going into a civil tax audit. Forewarned is forearmed. 


Did you receive a letter from the IRS? Contact our experienced legal team today

Serving local and international clients from offices in Chicago and Cleveland, the tax group at Robert J. Fedor, Esq., LLC helps you respond strategically to questions about IRS audits, offshore tax investment, or allegations surrounding false income tax returns. Call 800-579-0997 or contact us today.


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