One of the services we provide through our Low Income Taxpayer Clinic (LITC) is to represent people in the U.S. Tax Court. If you are selected for an IRS examination or audit, the IRS will take a closer look at your tax return to determine if there are any discrepancies or errors. At the end of this process, taxpayers are told if they still owe money. If they do not agree with the results of the IRS exam, they have 90 days to file in Tax Court.
According to LITC Director Dee Dee Gowan, however, this is far from a foolproof process. “Unfortunately, because most exams now are correspondence exams, often at the end, instead of reflecting the right result, it reflects the client’s inability to navigate that process,” she says. “And sometimes that is the point that they come to us. They didn’t understand the exam process, and now they have 90 days to file in Tax Court.”
The U.S. Tax Court is different than other courts. Located in Washington, D.C. and established by Congress in 1924 to handle the increasing complexity of tax cases, it travels around to different cities. “It goes to pretty much all major cities. And based on how full the docket is, that will decide how many times,” says Dee Dee. “It goes to Chicago and New York and San Francisco frequently because those dockets are huge. For Indianapolis, they come here once or twice a year.”
For Indianapolis in 2019, the first and possibly only date was on March 18. Although the Clinic LITC typically settles all of our tax cases so that they do not need to be litigated when the Court is here, we are still able to assist taxpayers on that day. “We’ll consult with people that just haven’t gotten an attorney yet. They haven’t gone to an LITC and they’re representing themselves,” says Dee Dee. “Sometimes people are over income and we can’t represent them, but we can give them a consult. We can sit down, look at their situation, coach them for half an hour, and be done.”
From year to year, the needs of those in Tax Court will vary greatly. “We’ve gone before and the whole place is cleaned up and there’s nothing there for us to do,” Dee Dee says. “Other years, I’ve been the only [LITC] there, and I’ve done like five or six consults and maybe represented a couple people out of it.”
Dee Dee recalls one year when the judge stopped the trial because he had a tax protester, whose argument before the Court was that he should not have to pay taxes. “There is a huge penalty—$25,000 automatic—that he was at risk for because you’re wasting the Court’s time. It’s a frivolous argument. We had consulted with him and warned him before.” When he tried to proceed with the argument anyway, the judge took a break and asked our LITC to speak with this man again. Our staff explained to him that he was about to incur a huge penalty if he did not stop. Fortunately, the man listened and dismissed his case before it was too late.
To learn more about our Low Income Taxpayer Clinic, please visit our website. If you owe the IRS or receive a letter from the IRS, please attend one of our intake sessions for a free consultation.