Receiving a Notice of Deficiency from the IRS can be one of the scariest things to receive in the mail. However, just because you received that notice, does not mean that you necessarily owe those taxes. These next 7 blogs will give you, the taxpayer a rundown, of how and where to dispute a deficiency and what to expect in the aftermath of your trial.
Choosing the correct forum is a vital part of starting an action in any dispute, but especially so in a deficiency action. For federal tax issues, the US Tax Court, Federal District Court, and the Court of Federal Claims are all legitimate places to file. The US Tax Court is a rotating circuit and comes to Atlanta in January, April, September, and November.
However, an important consideration is that to file in district court or the Court of Federal Claims, you must pay the amount that the Notice says and sue for a refund. In the US Tax Court, however, you can dispute the assessment and avoid paying before the judgment is rendered. Due to this, though not every case is the same, it is generally recommended to file your case in the US Tax Court. Not having to pay the tax beforehand can be a massive difference for lower income families and individuals.
For state tax issues, you can go to either the GA Tax Tribunal or Superior Court in the county you live or practice business in. Once again, some consideration should go into the forum you select here, too. If filing at Superior Court, you are required to either post a surety bond to cover the entire deficit, plus any penalties and interest, or you must own real property of greater value than the deficit. The Tax Tribunal has no bond or property requirements, but you will be forced to mediate with the Georgia Department of Revenue in the following 90 days after filing, to try to avoid trial.