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Understanding Your Rights: Can You Legally Sue the IRS?

Posted on: September 18, 2023

PN Editor
September 18, 2023

Understanding Your Rights: Can You Legally Sue the IRS?

Key Takeaways:

  • Takeaway 1: You can sue the IRS but only under very specific circumstances, such as if you believe they have made an error in calculating your taxes.
  • Takeaway 2: You cannot sue the IRS for tax disputes without first exhausting all available administrative remedies within the agency itself.
  • Takeaway 3: The process of suing the IRS is complex and requires a strong legal basis, typically involving constitutional rights or procedural issues.
  • Takeaway 4: If you win a lawsuit against the IRS, you may be entitled to damages. However, these cases are extremely rare and difficult to win.
  • Takeaway 5: It’s recommended to seek professional advice from a tax attorney before pursuing legal action against the IRS.

Grounds for Suing the IRS in Houston, TX

There are several reasons why you might consider suing the Internal Revenue Service (IRS). You may feel that your rights under the Taxpayer Bill of Rights have been violated. This can include issues such as right to privacy, right to challenge IRS’s position and be heard, or right to appeal an IRS decision in an independent forum.

Additionally, you could sue if you believe the IRS has made a mistake in calculating your tax liability and refuses to correct it. However, it’s important to note that simply disagreeing with the amount of tax assessed does not give grounds for a lawsuit. The issue must usually be about procedural errors or violations of rights.

Specific Laws in Texas Allowing You to Sue the IRS

The Federal Tort Claims Act (FTCA) allows citizens to sue federal agencies like the IRS for damages incurred due to negligence or misconduct by federal employees. Additionally, Section 7433 of the Internal Revenue Code (IRC) permits taxpayers to sue for damages if any officer or employee of the IRS recklessly or intentionally disregards any provision of this title in connection with any collection of Federal tax.

It’s also worth noting that Texas law itself doesn’t provide a basis for suing federal agencies – these lawsuits are governed by federal law. However, state courts in Texas can hear cases involving federal agencies under certain circumstances.

Initiating a Lawsuit Against the IRS in Houston, TX

Before initiating a lawsuit against the IRS, you must first exhaust all administrative remedies available within the agency. This typically involves filing a claim with the agency and giving them an opportunity to resolve it before taking legal action.

Once all administrative remedies have been exhausted and if your issue remains unresolved, you can then file a lawsuit against the IRS in either U.S District Court or U.S Tax Court depending on your specific situation. For instance, if you disagree with the IRS’s assessment of your tax liability, you would generally file a petition in Tax Court.

Type of Attorney Needed to Sue the IRS in Houston, TX

If you’re considering suing the IRS, it’s highly recommended that you seek legal counsel from an attorney who specializes in tax law. These professionals have an in-depth understanding of tax codes and procedures, which is crucial when dealing with complex IRS issues.

In Houston, TX, there are many experienced tax attorneys who can guide you through the process. They can help you understand your rights and options, assist with paperwork and represent you in court if necessary.

Statute of Limitations on Suing the IRS in Houston, TX

The statute of limitations for suing the IRS depends on the specific circumstances of your case. Under IRC Section 7433, a taxpayer has two years from the date that the right of action accrues to file a lawsuit for civil damages against the IRS for unauthorized collection actions.

It’s important to note that this deadline may be extended if you were legally incapacitated or could not have reasonably discovered the actions leading to your lawsuit within this timeframe. As always, consulting with a qualified tax attorney is recommended to fully understand these deadlines.

Documentation Needed to File a Lawsuit Against the IRS in Houston, TX

When filing a lawsuit against the IRS, it’s crucial to gather all relevant documentation related to your case. This may include copies of any correspondence between yourself and the agency such as notices or letters sent by them as well as any responses given by you.

Additionally, copies of your tax returns for relevant years will be needed along with any records pertaining to income earned and deductions claimed during those periods. Other documents like bank statements or receipts that support your claims could also be useful.

The Possibility of Self-Representation When Suing the IRS

While it is possible to represent yourself when suing the IRS, it’s important to understand that tax law is complex and can be difficult to navigate without professional help. The IRS has its own team of experienced attorneys who are well-versed in tax laws and regulations.

Understanding Tax Law

Tax law involves a myriad of rules, regulations, and procedures. It’s not just about knowing the tax code, but also understanding how the IRS interprets and applies these laws. Without a solid understanding of these aspects, you may find it challenging to effectively argue your case.

Seeking Legal Advice

Even if you decide to represent yourself, it’s advisable to at least consult with an attorney or a tax professional. They can provide valuable advice and guidance on how best to present your case.

Previous Cases of Successful Lawsuits Against the IRS in Houston, TX

There have been several cases in Houston where individuals or businesses have successfully sued the IRS. These cases often involve disputes over tax assessments or penalties.

Case Studies

One notable case involved a business owner who was able to prove that the IRS had incorrectly assessed his business income. Another case saw a taxpayer successfully challenge an unjust penalty imposed by the IRS.

Learning from Past Cases

Studying these past cases can provide valuable insights into what strategies might work when suing the IRS. However, each case is unique and what worked for one person may not necessarily work for another.

Typical Duration for a Lawsuit Against the IRS to be Resolved in Houston, TX

The duration of a lawsuit against the IRS can vary greatly depending on many factors such as complexity of the case, availability of evidence, and court schedules.

Initial Stages

The initial stages involve filing the lawsuit and the IRS responding to it. This can take several months.

Trial and Decision

If the case goes to trial, it could take another few months or even years before a decision is reached. If either party appeals the decision, this can further prolong the process.

Possibility of Appeal if Your Lawsuit Against the IRS is Unsuccessful in Houston, TX

If your lawsuit against the IRS is unsuccessful, you have the right to appeal the decision. The appeals process involves presenting your case to a higher court and arguing why the initial decision was incorrect.

Filing an Appeal

When filing an appeal, it’s crucial to adhere to all procedural requirements and deadlines. Failure to do so could result in your appeal being dismissed.

Chances of Success on Appeal

The success of an appeal largely depends on whether there were errors in how the law was applied in your case. It’s not enough to simply disagree with the outcome of your case; you must be able to show that legal mistakes were made.

Possible Outcomes if You Win a Lawsuit Against the IRS in Houston, TX

Winning a lawsuit against the IRS can result in several possible outcomes such as getting a tax assessment reduced or eliminated, having penalties waived, or receiving a refund for overpaid taxes.

Financial Implications

The financial implications of winning a lawsuit against the IRS can be significant. Not only could you save money on taxes or penalties, but you may also be entitled to interest on any overpaid taxes.

Impact on Future Tax Filings

Winning a lawsuit against the IRS could also impact your future tax filings. For instance, it could set a precedent for how certain income or expenses are treated for tax purposes.

Risks and Potential Negative Consequences of Suing the IRS in Houston, TX

Suing the IRS is not without risks. It can be a costly and time-consuming process. There’s also the risk of attracting more scrutiny from the IRS.

Financial Risks

The financial risks involve not only the cost of litigation but also potential penalties if you lose your case.

Increased Scrutiny

Filing a lawsuit against the IRS could potentially put you on their radar, leading to increased scrutiny on your future tax filings.

The Effect of Filing a Lawsuit Against the IRS on Future Tax Filings or Audits

Filing a lawsuit against the IRS could potentially impact your future tax filings or audits. The IRS may scrutinize your returns more closely, especially if your lawsuit involved disputing their interpretation of tax laws.

Increased Audit Risk

If you’ve sued the IRS in the past, they may be more likely to audit your future returns. This could result in additional stress and potential costs for defending an audit.

Changes in Tax Treatment

Depending on the outcome of your lawsuit, it could change how certain items are treated for tax purposes in future filings.

Resources Available for Someone Considering Suing the IRS in Houston, TX

There are several resources available for those considering suing the IRS. These include legal aid organizations, tax professionals, and online resources.

Legal Aid Organizations

Legal aid organizations provide free or low-cost legal services to those who cannot afford a private attorney. They can provide advice and guidance on how to proceed with a lawsuit against the IRS.

Tax Professionals

Tax professionals such as CPAs and Enrolled Agents can provide advice on tax laws and help prepare your case.

Alternatives to Litigation When Dealing with Disputes with the IRS in Houston, TX

Litigation should be a last resort when dealing with disputes with the IRS. There are several alternatives that can be less costly and time-consuming.

IRS Appeals

The IRS has an appeals process that allows taxpayers to dispute their tax assessments or penalties without going to court.


Mediation is another option where a neutral third party helps facilitate a resolution between you and the IRS. This can be a quicker and less adversarial way to resolve disputes.

In conclusion, while it is possible to sue the IRS in certain circumstances such as wrongful collection actions or negligence, the process is complex and requires specific conditions to be met. Legal advice should be sought before proceeding with such action.

What legal action can I take against the IRS?

For instance, if you filed your tax return on time and paid your taxes in full the previous year, and the IRS unjustly ignores or rejects your valid claim for a tax refund, you have the right to take legal action against them in a United States District Court or the United States Court of Federal Claims. This was announced on February 6, 2023.

Can you sue the IRS for wasting your time?

The guidelines for Section 7433 mirror those of Section 7426, which is applicable for non-tax collection activities, like audits done by IRS agents. Despite the general rule against suing the IRS, these sections of the Code allow exceptions. The IRS enjoys sovereign immunity being a government agency.

Who can fight the IRS?

The Taxpayer Advocate Service, an independent body within the IRS, is dedicated to helping taxpayers who are financially distressed, struggling to resolve tax issues through standard procedures, or believe that an IRS system or procedure isn’t functioning properly as of August 9, 2023.

Can the IRS take my computer?

If you don’t make arrangements to pay your overdue taxes, the IRS has the authority to confiscate your property.

How far can the IRS go back?

The IRS typically includes returns filed in the past three years in an audit. However, if a significant error is found, they may extend the audit to include more years, usually not exceeding the previous six years. The IRS strives to audit tax returns as soon as they are submitted.

Who rules the IRS?

The current head of the IRS is Daniel Werfel, assuming the role of Commissioner of Internal Revenue on March 13, 2023.

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