When you are the one suing
A taxpayer who has paid tax and wants it back generally must first file a refund claim with the IRS within the time allowed, and then wait for a denial or for a set period to pass without action before suing. Refund suits are brought in federal district court or the Court of Federal Claims, and the full tax for the period usually has to be paid first. That differs from the Tax Court, where a taxpayer who received a notice of deficiency can challenge it without paying. Grounds raised in court are generally limited to those stated in the refund claim, which is why the claim should be drafted carefully. Separate suits are available in limited situations, such as unauthorized collection actions or wrongful disclosure of tax information.
When the government sues you
The government can file suit to reduce an assessed tax to a judgment, which extends its ability to collect, or to enforce a federal tax lien against property, including a home. These cases are handled by Justice Department lawyers in federal district court. Defenses may include challenges to whether the assessment was valid and timely, or claims that a spouse or co-owner has an interest in the property that should be protected. Responding late to the complaint can lead to a default judgment, as in any civil case. Collection suits sometimes arrive long after the original tax year, which is why records of payments and IRS notices remain important.
Claims against preparers and advisers
Some income tax lawsuits are between private parties, such as claims against a preparer or adviser whose mistake caused penalties or lost benefits, or disputes between former business partners or spouses over who should bear a tax liability. Claims against advisers usually turn on what the adviser was engaged to do and whether the work met professional standards. They often carry state-law time limits that can begin running before the tax problem itself is resolved. We start by placing your matter in one of these categories, reviewing the notices, payments, and agreements involved, and confirming the deadlines. From there, we talk about whether a lawsuit is the right tool or whether an administrative route is still open.
