Resolving IRS Controversies: Strategies for Tax Law Success

Finding yourself in the middle of an IRS tax controversy can be extremely stressful. You believe that you filed your taxes correctly, but the IRS thinks differently or life’s circumstances have hindered your ability to pay your taxes. You now risk forced collection action along with penalties and interest, but you aren’t sure of how to proceed. 

Thankfully, you have several options for resolving IRS controversies. Exploring all of the solutions available to you — and working with an experienced tax attorney — can help you come out of an IRS controversy with success. 

Common Causes of IRS Controversies

A tax controversy is a dispute between you and the tax authorities. Common examples of IRS controversies include:

  • Incorrect reporting: The IRS may state that you misreported your income, deductions, or credits and therefore did not pay the correct amount of taxes. 
  • Audit findings: The IRS may request to audit your finances if it believes you misreported something on your tax return. Other times, the IRS randomly selects individuals and entities to audit. 
  • Failure to file and/or Failure to pay: Unfortunately, circumstances in life at times lead you being unable to afford to pay the required taxes for a given tax period which often leads to simply not filing the required tax return. Both of these situations are common when dealing with stressful periods of life. 

IRS Dispute Resolution Strategies

You have multiple options for resolving IRS controversies and disputes, aside from simply paying the amount the IRS claims you owe, so it’s important to work with a tax attorney who understands each strategy thoroughly.  

The IRS offers several tax resolution strategies 

  • Offer In Compromise (OIC): If you meet certain income requirements, you may qualify for an Offer in Compromise, which settles your tax liability for less than the full amount. 
  • Installment Agreement: The IRS may agree to an installment plan where you pay back your tax liability in increments over a specific period rather than a lump sum. 
  • Penalty Abatement: You can request a penalty abatement to remove penalties from the overall debt you owe, reducing your tax liability. 
  • Collection Due Process (CDP) Hearing: You can request a CDP hearing to present your case on appeal and reach a resolution. This could prevent the IRS from taking forced collection action such as a bank levy, wage garnishment or seizure of property. 

Not all of these strategies are available to all taxpayers. Work with a tax attorney to understand which one may apply to your situation. 

Tips for Navigating IRS Dispute Resolution 

As you work toward resolution of your tax liability, you must approach every step of the process strategically and mindfully. Following these tips can help you resolve IRS controversies successfully. 

  • Communicate clearly and effectively. Prepare for all conversations in advance, write down what you want to say, and stick to the script. 
  • Gather financial information.  Be prepared to discuss your income/expenses with an IRS representative.  Have the documents to support your finances prepared prior to speaking with the IRS. 
  • Be respectful and patient. Taking an aggressive tone with the IRS won’t help your case. Speak calmly and respectfully. 
  • Request a different representative, if necessary. If the representative you are speaking to isn’t cooperative, don’t be afraid to hang up, call back, and speak with a different one. 
  • Work with a reliable tax attorney. Resolving IRS controversies can be precarious. Improve your chances of success by partnering with an experienced tax attorney. 

Do you need help resolving an IRS controversy? Murray Moyer PLLC can provide professional guidance and resources. Call 919-846-6779 today for a consultation. 

Written by Justin Moyer on June 12, 2024.