IRS Civil Tax Controversies

In fiscal year 2010, the Internal Revenue Service (or "IRS") budget grew to $12.2 billion.  This was an increase of $386.7 million, the majority of which was directed to the enforcement budget of the IRS, which totals $5.5 billion. And, according to National Taxpayer Advocate Nina Olson, “[t]he conventional wisdom seems to be that more hard-core enforcement actions like liens and levies mean more revenue.”¹

Civil Tax Investigation & Audit

Unfortunately, all of this means that more individuals are being investigated.  If the government suspects you of tax wrongdoing, you might be subject to a civil IRS audit (or even a criminal tax investigation).  This can happen for a number of reasons:

• IRS Informant. You were reported to the IRS by a disgruntled ex-employee, business competitor, or ex-spouse.

• Tax Shelter. You participated in an allegedly abusive tax shelter.

• IRS Revenue Officer or Agent. You were contacted by an IRS Revenue Officer (or "IRS RO") or Revenue Agent (or "IRS RA").

• Unpaid Taxes. You haven’t been able to pay the taxes.

• Non-Filer. You haven’t filed a tax return - possibly ever or for several years.

• Innocent Spouse. You are or have an innocent spouse who was not involved in the tax planning.

• Suspicious Activity Report. You are or were represented by someone on a Suspicious Activity Report.  Or worse, you were represented by someone who was incompetent, but you didn’t know it.

• Random Audit. Your tax return was chosen at random.

• The IRS suspects you of failing to report all of your income, claiming false deductions, failing to collect or pay employment or payroll taxes, failing to file returns or preparing false returns, a scam to evade taxes, or a conspiracy to impede or obstruct the IRS.

These investigations and audits often target doctors, business owners, other types of business professionals, tax preparers, small businesses, and corporations.  They can lead to excessive tax liabilities or even referrals for criminal prosecution.

Civil Tax Lawyers

Our law firm works with accounting experts to negotiate with the IRS to save our clients as much money as possible.  If that doesn’t work, we have no problem taking the IRS to Federal Court, the U.S. Court of Claims, or the U.S. Tax Court.  In fact, IRS attorneys have been disbarred or had their licenses suspended because our law firm uncovered THEIR fraud.  (See Notable Cases.)

And, another important goal for many of our clients is to keep an audit from turning into a criminal tax prosecution. (See section on criminal tax.)

For more information, see The IRS Revealed and Civil Tax: Why People Hire Us.

¹See National Taxpayer Advocate 2010 Mid-Year Report, IR-2010-83, July 7, 2010.