Tax Litigation and Representation of Taxpayers Before the IRS and the Department of Revenue

The Tufts Law Firm fights for taxpayers who understand our country's voluntary tax system and why taxes are important. In our Potentially Abusive Tax Shelters--Detection and Analysis practice area, we are focused on coming to the aid of those who believe that they may have been victimized by what appears to be an abusive tax shelter or who may need assistance in understanding whether or not they should bear the responsibility of penalties being assessed against them for having participated in a potentially abusive tax shelter. In our Tax Litigation & Representation Before IRS and Department of Revenue practice area, we stand ready to fight for taxpayers who have acted in good faith in trying to comply with our complex federal income tax system, many of whom are in a position to show that they reasonably relied on the advice of a tax advisor, only to later find, to their chagrin and consternation that they have been let down by this advice, or victimized by an apparently abusive tax shelter product.

Over the years, Scott Tufts has had the fortune and honor of representing many taxpayers before the IRS and before our Federal court system who have found themselves faced with assertions by the IRS that they owe more tax, if not penalties, despite having acted in good faith or with the belief that the tax law is on their side. Similarly, over the years, Mr. Tufts has effectively represented taxpayers in disputes with the Department of Revenue, both here in Florida and previously, North Carolina. With approximately 18 years of practice before the IRS and state tax authorities, Mr. Tufts brings the versatility of also having worked on a wide range of tax issues, including international, federal and state tax issues, tax-exempt organization issues (including formations, applications for exemption, and intermediate sanctions analysis), corporate governance, entity formations, mergers and acquisitions, family business planning, and extensive partnership, LLP, limited partnership, LLLP, and LLC work. He has served as an expert witness on tax matters in state court litigation, and assisted taxpayers in all aspects of tax litigation or disputes at the administrative level. He has worked on IRS estate tax audits, accountant and tax lawyer malpractice claims, breach of fiduciary claims, partnership tax disputes, TEFRA settlements, innocent spouse claims, offers in compromise, applications for discharge and release of federal tax lien releases, collection due process hearings, and applications for private letter rulings on corporate and tax filing issues.

Audits are difficult and time consuming, requiring coordination with the tax return preparers, the gathering of information, and due diligence on how information is to be presented. The rights of the taxpayer must be respected and preserved.

SECTION 7434 CLAIMS

The McCormack case shows how important it is for taxpayers and their practitioners to not fall prey to what appears on any 1099, and hold the IRS to "proving" that there is any substance behind it. McCormack v. IRS, T.C.Memo 2009-239 (October, 2009).

While not at issue in the McCormack case, taxpayers and practitioners need to know that there is a provision in the tax law providing taxpayers with the right to be protected against the fraudulent issuance of information returns. Under Section 7434 of the Internal Revenue Code, civil damages can be assessed if any person "willfully files a fraudulent information return with respect to payments purported to be made to any other person." Damages recoverable are equal to the greater of $5,000 or the sum of any actual damages sustained by the taxpayer as the proximate result of the fraudulent information return, including any costs attributable to resolving the deficiencies asserted as a result of such filing, plus the costs of the action, and in the court's discretion, reasonable attorney's fees. The statute of limitations for bringing any such action is within 6 years after the date such fraudulent information return was filed or within 1 year after the date such fraudulent information return would have been discovered by the exercise of reasonable care. Any person bring an action under this law must provide a copy of the complaint to the IRS upon filing, and the court, when deciding the issue, is to decide the correct amount that should have been reproted.

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If you are a taxpayer who believes that you have acted in good faith, but are in need of representation in matters before the IRS or in our federal courts, please contact us.