Tax Disputes
When taxpayers disagree with tax authorities about liability or assessments, mediation provides a way to resolve tax disagreements efficiently.
About Tax Disputes
Tax disputes arise when taxpayers disagree with tax authorities about tax liability, assessments, or interpretations of tax law. These may involve questions about deductions, valuations, or the application of tax rules. Such disputes can be complex and involve significant sums. Common situations requiring tax resolution include non-filer status where taxpayers face penalties for failing to file and accumulated liability, outstanding tax debt that exceeds ability to pay, and audit notices for underreported income.
Tax authorities respond to unpaid balances by issuing aggressive collection notices, which precede enforced actions like wage garnishment or bank levies. Tax resolution options include settlement programmes allowing taxpayers to resolve liability for a lesser agreed-upon amount based on their ability to pay, payment plans providing formal paths to pay debt over extended periods, and hardship status that pauses collection activity when payment would create economic hardship.
Mediation offers a constructive way to address tax disputes. The appeals officer assigned to the case attends mediation sessions and retains authority to approve settlements, but the mediator does not impose a decision. If mediation successfully yields a resolution, the agreement is documented in a formal settlement. This approach can resolve disputes efficiently without the cost of lengthy tax litigation while allowing taxpayers to present their case effectively with professional representation.
What is it?
Tax disputes involve conflicts with tax authorities about tax liability, assessments, or interpretations of tax law. This may include disputes about tax returns, assessments, deductions, or the application of tax rules to particular situations. Tax disputes can arise from audits, underreported income, or disagreements about tax treatment of specific transactions.
Your rights and options
When taxpayers disagree with tax authorities about liability or assessments, you have options for resolving the situation. You can negotiate directly, seek mediation to find practical solutions, or pursue formal appeals. Mediation is often the most effective approach because it allows you to present your case effectively while avoiding the costs of litigation.
Mediation provides a confidential space to discuss tax disputes. A neutral mediator helps taxpayers and tax authorities discuss the issues and work towards resolution. This approach can resolve disputes while avoiding litigation costs.
Review tax returns. Think about what outcome would address your needs. The Olive Branch can help resolve tax disputes through mediation.
Frequently Asked Questions
What constitutes a tax dispute?
Tax disputes involve conflicts with tax authorities about tax liability, assessments, or interpretations of tax law. This may include disputes about tax returns, assessments, deductions, or the application of tax rules to particular situations. Tax disputes can arise from audits, underreported income, or disagreements about tax treatment of specific transactions. Common situations include non-filer status, outstanding tax debt, and audit notices.
How are tax disputes resolved?
Tax disputes can be resolved through negotiation with tax authorities, mediation through programmes like the IRS Appeals mediation, formal appeals through the tax authority's appeals process, or litigation in tax court. Tax resolution options include Offer in Compromise (OIC) allowing taxpayers to resolve liability for a lesser amount, Installment Agreements providing formal paths to pay debt over time, and Currently Not Collectible (CNC) status that pauses collection activity when payment would create economic hardship.
Can tax assessments be challenged?
Yes, tax assessments can be challenged through the tax authority's appeals process. Taxpayers have the right to receive notice of assessments and the right to appeal. The appeals process typically involves submitting a written protest explaining why you disagree with the assessment, providing supporting documentation, and potentially participating in a conference with an appeals officer. If the appeal is unsuccessful, taxpayers may further challenge the assessment in tax court.
What happens when taxes are unpaid?
When taxes remain unpaid, tax authorities may take collection actions including issuing aggressive collection notices, imposing liens on property, garnishing wages, levying bank accounts, and seizing assets. The IRS responds to unpaid balances with notices such as CP504 or LT11, which precede enforced actions. Taxpayers facing collection actions should respond promptly and explore resolution options such as installment agreements, offers in compromise, or currently not collectible status to avoid or stop collection actions.
Related Specialism
Regulated Sector and Financial Services DisputesSources
International Sources
- OECD Model Tax Convention (Agreement)
- OECD Transfer Pricing Guidelines (Guidelines)
- UN Model Double Taxation Convention (Agreement)
- International Monetary Fund tax policy guidelines (Guidelines)
- World Bank taxation indicators (Indicators)
Continue your search for resolution
Every dispute is personal and complex. We are here to provide the neutral space and expert guidance you need to find a lasting resolution.
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