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Tax Attorney – Refund Suit in District Court

The Internal Revenue Code contains two distinctly different procedural paths by which taxpayers can bring their substantive tax controversies to litigation. These paths are commonly known as (1)”deficiency procedures,” and (2) “refund procedures.” Deficiency procedures relate exclusively to income, estate, gift and certain excise taxes. They involve an examination of the taxpayer’s return, followed by the issuance of a 30-day letter identifying the adjustments and providing the taxpayer with the opportunity for a review in the IRS Appeals Office and then the issuance of a statutory notice of deficiency, which offers the taxpayer the right to litigate the matter in the U.S. Tax Court prior to assessment and payment.

Refund procedures, by contrast, (1) may involve any kind of tax, (2) may originate from the actions of either the taxpayer in filing an amended return or the government in examining the taxpayer, (3) usually involve the issuance of preliminary notices offering Appeals review, and (4) may lead to the issuance of a Notice of Disallowance, providing the taxpayer with the opportunity to litigate in the district courts or Court of Federal Claims.

Before a person may file an action in court that involves matters over which an administrative agency has jurisdiction, the administrative agency has to be given an opportunity to rule on the matter. Consistent with this, before a taxpayer may file suit to recover an overpayment of tax in a U.S. district court or in the Court of Federal Claims, he or she must file a timely and proper claim for refund with the Internal Revenue Service.

Refund claims generally must be filed with the Service within the later of (i) three years from the return’s due date or its actual filing date (the “three-year” rule) or (ii) two years from when the tax was paid with respect to which the taxpayer seeks refund (the “two-year” rule). I.R.C. § 6511(a). If the claim is filed outside these periods, it does not comply with the statute of limitations and is untimely. Section 6513 establishes that any early payments, such as withholding, estimated tax payments and an overpayment from a prior year that the taxpayer elects to be treated as a payment for the current year, are deemed to be made on the due date of the return.

If the Service denies a claim for refund, or fails to act on a claim for refund within a reasonable time, a taxpayer may have little choice but to go to court. The only courts available for litigation of disallowed refund claims are the U.S. district courts and the Court of Federal Claims.

The rules and procedures relating to federal court require an experienced tax attorney to navigate. Insight Law will provide top notch representation for you and/or your business in the United States Tax Court, or the United States Federal Court, District of Western Washington. Call today to arrange a meeting at one of our convenient locations in Downtown Seattle or Burien. Insight Law is ready to step in on your behalf and fight the IRS lawyers with their own weapon.