The IRS Will Absolutely, Positively Not Pay Your Attorneys’ Fees (Or Will They?)

Yes, the IRS can be required to pay a taxpayer’s attorney fees and costs in certain situations, as outlined in section 7430 of the Internal Revenue Code. This can apply to administrative proceedings and court cases, but there are specific requirements that must be met. The article also discusses recent proposed regulations from the IRS on this issue. A flow chart at the end of the article helps to understand when a taxpayer may be eligible for these costs. Did you go to court to fight over your taxes? If you did, the government might have to pay for some of your legal fees. For example, if you disagreed with the IRS about your taxes and went to Tax Court, or if you paid your taxes and later sued to get some money back. Or, if the IRS took you to court to collect unpaid taxes. Taxpayers who win a court case against the IRS can sometimes get their legal expenses covered. To qualify for this, the taxpayer must have tried to solve the issue with the IRS before going to court, and they must have provided all the necessary information during the court process. The court will also check if the taxpayer’s legal costs are reasonable. If the taxpayer made a settlement offer to the IRS that the IRS didn’t accept and the taxpayer did better in court, then the taxpayer is considered the winner and the IRS is not considered to be reasonable in their position. Qualified offers don’t apply to cases where the tax amount is not at issue. A qualified offer is an official written proposal to the IRS about the amount of taxes a taxpayer owes. It must be made within a certain time frame and specify the exact amount or percentage of the tax liability. The offer does not have to include payment terms. If the IRS accepts the offer, the taxpayer may be able to recover their costs. If the IRS rejects the offer and the court later determines the taxpayer owes more taxes than the offer amount, the taxpayer may still be able to recover costs if certain conditions are met. The purpose of the qualified offer rules is to encourage the IRS to take settlement offers from taxpayers seriously. When the IRS makes a decision about your taxes, you can check if you meet five requirements to get your administrative costs covered. These requirements are similar to those for recovering legal costs. If you meet the requirements, you can get your reasonable administrative costs covered from the date you first received notice from the IRS about your taxes. This date could be when you got a decision letter, a notice of deficiency, or a letter giving you a chance to discuss your case with the IRS. Even though the IRS only takes a position when they issue a decision letter or a notice of deficiency, you can still get your costs covered from the date of the first letter you got from the IRS about your taxes. An administrative proceeding is a procedure or action before the IRS. You can request to recover costs from the IRS within 90 days of their final decision. The IRS may deny the request, but you can petition for review of that denial. However, you cannot recover costs if the issues are before a U.S. court. If your offer to the IRS is reasonable, they are likely to accept it. If not, you may be able to recover your costs through normal procedures. If you disagree with the IRS about your taxes, there are rules about who can get their legal fees paid by the IRS if they win their case. The rules are pretty complicated, but they mainly have to do with how much money you have and whether the IRS’s position was reasonable. If you want the IRS to pay your legal fees, you have to follow the rules and make your case within a certain amount of time. But even if you win, there are still limits on how much the IRS has to pay. Harris L. Bonnette, Jr. is a lawyer who specializes in federal tax issues. He is highly qualified and experienced in this area of law. He has written an article for the Tax Section. “To teach its members to do their job well and help others, to make the legal system better, and to improve the study of law.”

Source: https://www.floridabar.org/the-florida-bar-journal/the-irs-will-absolutely-positively-not-pay-your-attorneys-fees-or-will-they/