Since the Tax Cuts and Jobs Act passed earlier this year, we have been continually asked about what recent Tax Court rulings we’ve seen because of this. The truth is, we have not seen any tax court rulings affected by it yet. Because the changes will not set in until January 1, 2019, all current tax court cases are not affected by it.
While we spend the bulk of the year representing our clients in audits, responding to IRS letters, stopping bank levies and wage garnishments, working on Offers in Compromise, preparing tax returns, fixing payroll and sales tax issues, among a plethora of other tax-related items, we only spend a couple weeks per year at Tax Court.
Tax Court only occurs twice per year. It’s important to know very few cases make it to Tax Court; most are settled with the IRS before it gets to that point. Most parties do not want to go to court, because it can be riskier than settling beforehand. You can go to Tax Court if you are called for an audit and disagree with the IRS. If you disagree the IRS sends you a “Notice of Deficiency” or a 90-day letter, stating the adjustments that the IRS wants to make to your return. You have 90 days to file a petition with the Tax Court.
Tax Court is made up of approximately 19 judges who travel to all 50 states throughout the course of the year. Unlike some courts, you will not be tried before a jury. The judge is the one who makes all the decisions. During tax court, you will bring forth your credible evidence before the judge. Evidence you should bring are documents or items that will help support any expenses you claimed. For instance, if the IRS says you didn’t incur a certain expense for a vehicle or an employee, you should bring a mileage log, proof of payments, or bank statement to prove the expense you are claiming. Any type of record is critical in these cases. If you have the records to support your position, the IRS must accept them or prove that they’re false.
You can also bring along anyone you like to Tax Court. It is in your best interest to bring a tax attorney with you, especially one with tax court experience. You can bring witnesses, but it’s important to know character witnesses won’t help you in Tax Court. The best kind of witnesses you can bring are employees or a business partner who can verify your business expenses or support your case.
Once you and the IRS have rested your case, you have to wait a bit before you actually receive the court’s decision. Sometimes you won’t know your outcome for about a year or two. If you lose your case and you are filed your case as a Small case, you cannot appeal it. If you lose in tax court, and are not considered a small case, you can appeal it. You can go to the US Court of Appeals in your district and you will have 90 days to appeal.
If you are headed to tax court or are being audited by the IRS, Polston Tax can help. Our team of tax attorneys and tax accountants can help you reach an affordable resolution with the IRS. Call us today at 844-841-9857 or click below to schedule a free consultation.