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I am looking for a tax attorney to help with Federal appeal…

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I am looking for a tax attorney to help with Federal appeal for return of estimated payment money confiscated by IRS for my not having filed within three years.

Accountant's Assistant: What state are you in? It matters because laws vary by location.

Michigan . . . though the issue is Federal taxes.

Accountant's Assistant: Has anything been filed or reported?

Oh yes; and a year ago I received a notice that they were keeping my money. I appealed, but was denied and told my only recourse was Federal court.

Accountant's Assistant: Anything else you want the lawyer to know before I connect you?

That the amount they appropriated was $10,000.

Submitted: 6 months ago.Category: Tax
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Answered in 1 day by:
1/6/2018
Tax Professional: James Daloisio, Tax Attorney replied 6 months ago
James Daloisio
James Daloisio, Tax Attorney
Category: Tax
Satisfied Customers: 735
Experience: 24 years of continuing education and experience.
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Hi, my name is ***** ***** welcome to Just Answer.

Your post leads me to a number of questions about your case. However, let's begin with an overview of what happened:

1. The IRS does not "confiscate" or "appropriate" your money. Your post says that the funds involved were "estimated payments." So to begin, is it correct that you made estimated (quarterly) income tax payments for one or more tax periods, each ending on December 31st of their respective years?

2. Estimated payments are generally associated with self-employed persons. Were you self-employed and were the payments related to your business?

3. Despite making estimated payments, you did not file tax returns. Here's where it gets tricky.

A. If you received earnings in the form of wages, self-employment income, etc., the payors will report those earnings to the IRS, which will determine, based on those earnings, whether you had a filing requirement.

B. If your earnings were high enough ($400 for self employment, $10,000 for wages) the IRS would have sent you a demand for tax return for each year that they determined you had a filing requirement

C. If you failed to respond to the demand for return, the IRS will take the documents that they have showing your income and create an SFR: "Substitute For Return." This tax return uses only the information in yourW-2 and/or 1099-MISC and does not take into consideration any deductions that the IRS may not be aware of. Typically, taxpayers wind up owing money for each SFR.

D. If you've made estimated payments, they will simply apply those payments to each tax year for which they've determined a deficiency.

4. Now, here's the rub. Suppose you've looked at those returns and realized that there were a number of deductions and/or credits that were available to you that the IRS didn't take? Your course of action would be to file an amended return, form 1040-X, for each year, and get a refund of the over paid taxes.

A. BUT: Section 6511 says you can only receive a refund by filing the appropriate claim "within 3 years from the time the return was filed or 2 years from the time the tax was paid," whichever is later. (26 US 6511(a).) Being that you didn't file a return, you're looking at a two year period from the date of payment, which is the date you made your estimated payments. If your claim for refund is filed later than that, it will be denied because Section 6511 is quite clear: "No credit or refund shall be allowed or made after the expiration of the period of limitation prescribed in subsection (a) for the filing of a claim for credit or refund, unless a claim for credit or refund is filed by the taxpayer within such period." (26 US 6511(b)(1).) After that, your overpayment is deemed to be a gift to the Treasury.

5. I'm presuming that you are at this point in your case and you want to file a refund claim in Federal District Court or in the Court of Federal Claims. To initiate such a suit it has to be filed within two years of receiving the first notice of disallowance of your claim.

Now that you are at this point, it might be wise to take a breath and consider the basis for your claim:

- Did you not make enough to have a filing requirement?

- If you had a filing requirement, did you not owe as much as the IRS claimed you owed?

- Did you have a good reason for not filing tax returns for the applicable years?

The court is going to look for some legal basis for your claim, and for some valid reason why the original claim was not timely. Or perhaps it was and the IRS just did not agree on the liability issue. In any event, there are several threshold decisions to be made.

1. Which court. You can choose between the District Court or the Court of Claims. Both have jurisdiction to hear refund suits and the decisions of both courts may be appealed. If you have case that you feel might be sympathetic to a jury, you'd choose District Court.

2. Basis for suit. Your refund suit must clearly state the grounds for the claim. The general rule is that a refund suit in District Court is limited to the grounds stated in your original claim.

3. Did you owe the tax? If not, why not? Was this stated in your original refund claim?

Please take a look at this response and comment appropriately, and I'll try to guide you from there. Thanks.

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