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What could be worse than owing taxes to the IRS? Being audited by the IRS. After completing the audit, there is a good chance that the agency will hand you a tax bill. At this point, you may decide to agree with the agency’s findings, but if you don’t, you do have an option.

If you decide to dispute the findings, the IRS will send you a 90-day letter called a “notice of deficiency” that outlines the changes to your tax returns that the agency wants to make. At this point, you have 90 days to file a dispute in the Tax Court. If you miss this deadline, the changes suggested by the IRS take effect since you effectively agreed to its findings.

How does the Tax Court work?

Unlike other state and federal courts, there is no building labeled “Tax Court” in your Missouri community. Nineteen judges who travel throughout all 50 states for proceedings hear the cases and make up the Tax Court. Like other state and federal court cases, you may bring witnesses to substantiate your expenses. However, documentation is crucial. The more documented evidence you have, the better your chances are that the IRS will accept your evidence or that the court will rule in your favor.

If the amount in dispute is under $50,000, you may file a “small case,” which is less formal than other cases, which may appeal to you. However, you need to know that neither side may appeal the court’s decision in these cases. If you want the option to file an appeal within 90 days of receiving a decision, you may want to file a regular case. Of course, the decision in a regular case could take anywhere from one to two years to get. The time may be shorter for a small case.

Is it worth it?

The fact is that most of the Tax Court’s decisions favor the IRS. However, that should not discourage you from filing your petition. Around 90 percent of Tax Court cases settle. The IRS may reduce the original amount requested, and you may even be able to negotiate a reduction or elimination of any penalties and interest attached to the amount in dispute.

This is where an experienced Tax Court attorney proves invaluable. If your case ends up going before the court, having such an advocate may help you achieve a better outcome. In addition, he or she understands how to negotiate the best resolution possible with the IRS. Only you can decide whether pursuing this avenue is worth it for you, but in order to know for sure, you may want to sit down with an attorney to discuss your options.

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