In case one loses some money after an audit and forwards the matter for appeals, he/she may get some reprieve from the interest, and penalties which the auditor determines to be payable. However, if such a course of action fails, or only succeeds in reducing one's assessment by a meager amount; such a person will still have recourse in court. The first port of call for an aggrieved person would certainly be the Tax Court.
The Tax Court is spread out in the largest cities of every State. In most of these States, hearings are conducted monthly around the calendar year except during summer. For sparsely populated States, they are only carried out for only a few weeks every year. Decisions in Tax Courts are rendered by a judge, and not a jury, as in other courts. The court, which is fully autonomous from the Tax Service, is simply mandated to give taxpayer a hearing that is as fair as possible. Judges in the court are Presidential appointees, usually appointed for an unexpired term of 15 years. These appointees are typically lawyers with an IRS background and considerable knowhow in tax law.
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Merits of the Tax Court:
This court has several advantages, including the fact that persons who sue the IRS stand a considerable chance of enjoying some success. A large chunk of such matters are settled out of court before they even proceed to trial. The IRS takes this road because it recognizes that persons who take up this option are hell-bent on reducing or totally eliminating assessments due to them by any means necessary and, therefore, does this to forestall the possibility of losing more money in court than that forfeited through settlement. Another important advantage of this court is that one doesn't have to pay the tax so determined before going to court. A person cannot present their matter to this court when they have already paid the monies demanded by the IRS.
Disadvantages of the Tax Court:
One of the most glaring demerits of the court is the period it takes to conclude a matter. Typically, about half a year will lapse between when one files their petition and when they are finally summoned to appear before the court. The time for determination spans one year and more. Interest will continue to be charged on the unsettled balance as the case drags on.
Other Courts:
For other taxpayers, their appeals process will come to an end at either the District Court or the Claims Court. Both courts of law are vested with the authority to reverse any decision handed by the tax court, provided one pays the full amount of money still unpaid from that assessed in the audit.
The Bankruptcy Court:
For a case to be prosecuted before Bankruptcy Court, one must have already filed for bankruptcy. People are counseled to make careful thought before selecting this court because bankruptcy carries with it, numerous serious consequences.
Legal Avenues:
There are numerous legal avenues open for those who seek to reverse an unfavorable decision by the taxman. Even though the Court is typically the initial one to have receipt of any appeal, there are instances when other courts should be utilized instead.
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