Will Tax Court Delays Result in Premature Tax Assessments?

 Posted on August 17, 2021 in Tax Appeals

Taxpayers have a number of options for responding to attempts by the IRS to collect taxes. If the IRS conducts a tax audit and determines that there is a tax deficiency, it may perform a tax assessment and take action to collect the amount owed. A taxpayer can appeal the IRS’s determinations by filing a petition in U.S. Tax Court, and after a petition has been filed, the IRS is prohibited from taking action to perform a tax assessment or collect taxes while the matter wends its way through the Tax Court process. However the U.S. Tax Court is currently experiencing delays, and this may result in complications and difficulties for some taxpayers.

Responding to Tax Court Delays and Premature Tax Assessments

Typically, the U.S. Tax Court receives 23,000 to 26,000 petitions from taxpayers each year. As of July 23, 2021, the Tax Court court has already received more than 24,000 petitions this year, and this has affected its ability to process cases. Because of the large number of petitions, there may be a delay between when a person files a petition with the Tax Court and when the Tax Court serves notice of a petition to the IRS.

A taxpayer has a 90-day window to file a Tax Court petition after receiving a Notice of Deficiency from the IRS. Normally, the IRS will not perform a tax assessment or begin the process of collecting taxes for 15 days after the end of this 90-day period. This allows time for the Tax Court to process a petition and serve notice to the IRS. However, due to the current backlog of petitions, the Tax Court has been taking around 75 days to process petitions. This means that unless a person filed a petition near the beginning of the 90-day window, the IRS is likely to perform a premature tax assessment.

If the IRS performs a premature assessment, it may begin taking action to collect taxes. These actions may include issuing tax levies to seize funds in a taxpayer’s bank account, garnish their wages, or intercept their tax refunds or Social Security benefits. The IRS may also place a tax lien on a person’s property. To prevent these types of actions or reverse a premature assessment, a taxpayer can contact the IRS and provide information proving that a Tax Court petition has been filed. 

Contact Our San Jose Tax Appeals Attorney

Taxpayers can increase their chances of success in tax audits and appeals by working with an attorney who has a strong knowledge of tax laws and experience handling cases in tax court. If you have received a Notice of Deficiency from the IRS, John D. Teter Law Offices can help you file a timely petition in Tax Court to appeal this decision. We can also help you respond to a premature tax assessment and ensure that the IRS does not take any collection actions while your case is ongoing. To get legal help with tax-related issues, contact our San Jose, CA tax lawyer at 408-866-1810.

Sources:

https://www.ustaxcourt.gov/resources/press/07232021.pdf

https://www.taxpayeradvocate.irs.gov/news/nta-blog-have-you-recently-filed-a-petition-with-the-u-s-tax-court/

https://news.bloombergtax.com/daily-tax-report/tax-court-delays-hit-unrepresented-low-income-people-hardest