Federal and California State Tax Appeals

Because nobody is perfect, including taxing authorities.

Federal Tax Appeals

The government has the ability to seize your assets to satisfy your tax liabilities. Before the IRS can do so, you must be offered the opportunity to request a Collection Due Process (CDP) hearing before the IRS Office of Appeals. A CDP hearing may be your last best chance to resolve a tax controversy with the IRS short of tax litigation.

The Collection Due Process hearing provisions give taxpayers an opportunity for an independent review to ensure that the levy action that has been proposed or the NFTL that has been filed is warranted and appropriate. In Field Collection, an IRS collections agent should consider alternative methods for resolving the case, such as installment agreements (IAs) and offer in compromise (OIC), should be considered before proposing a levy or filing a Notice of Federal Tax Lien. At that hearing, you may ask for an installment agreement, an Offer in Compromise, or any other collection alternative. You may also request to be treated as an innocent spouse and if you have not already had an opportunity to do so, dispute the amount of the tax liability.

The results of the Collection Due Process Hearing appear in a Notice of Determination prepared by the Appeals Officer, which is sent to the taxpayer. The Notice of Determination must confirm that all procedural requirements were met in the taxpayer’s case and decide the merits of any issues asserted by the taxpayer during the hearing. If the parties reach an agreement regarding any relief or other action to be taken, the Notice of Determination will set forth the terms and conditions of the agreement.

If a taxpayer receives an adverse ruling, he/she has 30 days to appeal the findings in the Notice of Determination with the Tax Court. CDP hearings provide many benefits to taxpayers, but whether it is the right option for a taxpayer depends on many factors. It is important that taxpayers or their representatives know their CDP rights and preserve their right to appeal to tax court if necessary.

Substantive and procedural tax law knowledge and effective representation are crucial to the success of your case in court. Consult Mendes Weed, LLP regarding your options and the most efficient tax litigation strategy.

California State Tax Appeals – The Office of Tax Appeals (OTA)

The Office of Tax Appeals (OTA) is an independent and impartial appeals body created by the Taxpayer Transparency and Fairness Act of 2017. The office was established to hear appeals from California taxpayers regarding various taxes and fees administered by the California Department of Tax and Fee Administration and the Franchise Tax Board.

The OTA has jurisdiction to hear appeals from the FTB in a variety of circumstances, including appeals of corporate income or franchise tax Notices of Action, claim for refund denials and assessment, and collection actions. The OTA also hears appeals from decisions of the CDTFA that are adverse to taxpayers or other state agencies.  

The OTA has a promulgated set of regulations. In general, a taxpayer has between 30 to 90 days to appeal an action of the FTB or CDTFA, depending on the nature of the underlying action. Filing an appeal triggers a formal briefing process (though time extensions often are granted). The OTA appeals process permits discovery, including the issuance of subpoenas. The OTA encourages the parties to engage in informal discovery, however, and the parties must show that they attempted informal discovery before the agency will get involved.

Taxpayers have a right to an oral hearing before a three-judge panel and may request an informal conference at any time. While unanimity is not required for a Panel’s opinion, two of the three Panel members “must concur” to an opinion’s holdings. As a general rule, OTA proceedings are public and the OTA will post notice of a scheduled oral hearing on its website at least 15 days before the hearing. During a hearing, parties can call witnesses and introduce exhibits. 

The OTA issues a written decision in every case, which the parties may request redacted for publication or sealed. This decision becomes final in 30 days unless the parties file a petition for a rehearing. Decisions are posted within 100 days after becoming final.

Christina Weed, Walnut Creek Attorney

California Tax Law Specialist

Partner Christina Weed has years of experience helping businesses and individuals with their complex California tax litigation issues. She is a licensed attorney with an LL.M. in Taxation from the University of San Diego and a Bachelor’s Degree in Accountancy. She serves as Chair of the Tax Section of the Contra Costa County Bar Association and is also a member of the Estate Planning Council Diablo Valley and the Tri-Valley Estate Planning Council.

In 2018, Christina became one of the first lawyers to argue a case in front of California’s Office of Tax Appeals.

Christina has been designated a Certified Specialist in Taxation by the State Bar of California.

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