There are numerous documents that an individual will need both to file their taxes and handle an income tax case or audit, including:
- Document 1: Social Security and identification information – This includes an individual’s driver’s license or other identification and Social Security card for all individuals involved in the tax return.
- Document 2: Income information – This may include Income statements such as W-2s and MISC-1099s from each employer.
- Document 3: Tax deduction documents – This may include a mortgage interest statement, donation records, and tuition statements as well as other available deductions.
- Document 4: Proof of expenses – This includes expenses that can be deducted from the tax return, such as medical bills, charitable contributions, and some education expenses.
- Document 5: Documents showing any other type of income –This may include Tax forms that report other types of income, for example, Schedule K-1 for trusts, partnership and S corporations.
It is very important for an individual to keep any communications they receive from the IRS so that their attorney can understand the issues and what deadlines have to be met. Letters from the IRS will include:
- Changes made to the individual’s tax return;
- Response dates; and
- Dates that may trigger interest or penalty charges if they are not followed.
An individual’s attorney will be able to review communications from the IRS and check their tax return for any issues or mistakes. There are certain factors that explain a discrepancy, such as:
- Missed deductions or credits;
- The individual having a significantly different tax situation from the previous year;
- Purchasing a home;
- Opening a small business;
- An honest mistake; or
- Some other unforeseen error.
There are also other documents that the individual may want to share with their attorney, including:
- Any documents related to a pending divorce;
- Any documents related to a divorce that occurred that tax year;
- Any documents related to bankruptcy filings; and
- Any other financial documents an individual believes may be relevant.
How Will This Evidence Make My Income Tax Case Stronger?
An income tax case is made stronger with the help of a financial lawyer. Taxes are due each year on April 15 to both the state and federal governments.
Tax laws can be very complex for individuals to understand. If an individual receives communication from the IRS, they should act immediately.
If they receive a communication or something that they do not understand, they should consult with an attorney. Typically, serious consequences can arise if the individual does not properly respond in a timely manner.
An individual will need to have the documents and records discussed above to support their claim. Interacting with the IRS can be intimidating and difficult and is best handled by an attorney.
In many cases, an attorney will also be able to negotiate on the individual’s behalf with the IRS to help resolve their issue. This may include the individual being able to pay off their debt using a payment installment plan.
Another option may be an offer in compromise (OIC) where the individual settles their tax liabilities for less than the full amount that is owed. If an individual’s attorney can show they made an honest mistake, their attorney may be able to negotiate with the IRS for an abatement or a waiver.
It is important to be aware that a spouse may be able to apply for innocent spouse relief or equitable relief if their spouse or former spouse engaged in any of the following:
- Failed to report income;
- Improperly reported income; or
- Improperly claimed deductions or credits.
If an individual filed for bankruptcy, it may also affect the back taxes they owe. It is essential that they inform their attorney of any pending bankruptcies. If an individual filed for a Chapter 7 bankruptcy, it may allow them to discharge a personal obligation to pay back taxes.
However, it will not remove any federal tax liens on property.
How to File Evidence in Court for an Income Tax Case?
Interacting with the IRS can be difficult, intimidating, and complex and is best handled by an attorney. Evidentiary issues are often complicated and must follow many rules and deadlines that an income tax lawyer will be familiar with.
An individual may be able to communicate and negotiate with the IRS on their own, but the odds of it ending in their favor are much lower than when handled by a lawyer. There are numerous different issues an individual may have when handling their taxes, including:
- Owing back taxes;
- Owing back taxes for multiple years;
- An IRS error regarding the amount owed on a tax return;
- A payment that is not affordable; or
- A significant life event occurring in the tax year, such as a divorce.
There is a United States Tax Court that provides taxpayers with a judicial forum to dispute tax issues they may have with the Internal Revenue Service (IRS). It is important to note that the Tax Court is not connected in any way to the IRS.
Typical cases the Tax Court hears are tax disputes concerning:
- Notices of deficiency;
- Notices of transferee liability;
- Failure to abate interest; and
- Worker classification.
An individual’s case may be taken to tax court before any disputed amount is paid. An individual has to file specific timeframes and deadlines in tax court, so it is important to have the assistance of a lawyer.
This is because there are no exclusions to these deadlines. Once an individual’s case is pending, the taxes that they owe will be suspended until a decision is made.
An individual’s tax court trial will be held before a judge and without a jury. Although an individual is permitted to represent themselves, it is always better to be represented by an attorney.
Many cases are settled without a trial. It is essential to have representation from a lawyer during any settlement negotiations as well.
If a trial is held, the judge will issue a report regarding their decision. If an individual’s dispute involves an amount that is less than $50,000, they can choose to have their case tried using small tax case procedures.
This is typically a less formal process that requires less evidence and is resolved quicker. An individual can request to have their case changed to this type after they submit their claim to the tax court.
Once a decision is received for the tax court, an individual has 90 days to appeal. It is important to note, however, that small tax cases cannot be appealed.
An individual’s best chance at a favorable outcome either when dealing with the IRS or in tax court is to be represented by an experienced attorney who will be best prepared for submitting evidence to court to support the claim.
What If This Is Not Accepted by the Courts as Evidence?
There are some situations in which evidence may not be accepted by a court for various reasons. This is one of the main reasons it is essential to have legal representation.
A lawyer will be aware of the rules of evidence and the deadlines for submission, which gives any evidence the best chance at being accepted by the court. If, for some reason, evidence is not accepted, a lawyer will be prepared with alternate evidence or with an argument for an exception that would allow the evidence to be admitted.
How Can a Lawyer Help Me With My Evidence?
If you have any tax issues, it is essential to have the assistance of a tax lawyer. Your income tax returns and tax laws can be very difficult to understand and navigate.
Your lawyer will be familiar with tax laws as well as the processes and requirements for working with the IRS. Your lawyer will also be familiar with the typical deadlines and negotiation strategies that work best in tax cases.
It is important to note that the IRS is a large government agency with a substantial budget and attorneys on staff who do nothing but handle these issues daily. It is important to have your own attorney to protect your rights and obtain the best possible outcome in your case.