How to Sue the IRS. The Internal Revenue Service was once virtually immune from lawsuits, even when it engaged in questionable practices. While this has changed, it is still difficult to sue the IRS. However, if you feel you've been wronged by the department, here are some tips to assist you in preparing a lawsuit.
Understand the tax court system. The U.S. Tax Court handles most of the litigation and allows taxpayers to litigate their tax disputes without paying the tax liability up front. The U.S. Federal District Courts hear federal tax claims brought by taxpayers however, they require taxpayers to first pay the tax liability assessed and sue for a refund. The U.S. Court of Federal Claims hears cases against the United States, including federal tax claims, and also requires taxpayers to prepay their tax liability before they can bring suit for a refund.
Recognize the different legal theories on which a lawsuit against the IRS can be based. The federal district courts allow suits against the IRS for those damages resulting from an IRS employee's reckless or intentional disregard of the tax collection procedures. These courts also allow a taxpayer to sue for damages resulting from the IRS's failure to release a lien.
Gather information. Before you sue the IRS, you need copies of all papers, documents or other evidence that helps establish your claim. This includes tax records and returns, receipts, correspondence with the IRS, etc.
Consult an attorney. You should speak with an experienced tax attorney if you have any questions regarding the validity of your claim, and for advice and representation regarding how to sue the IRS.
Know that, before bringing suit against the IRS, you generally must exhaust administrative remedies, first. This means following the appeals procedure within the IRS itself.
- Don't delay. Generally, the rules require that you sue the IRS within two years from the date the violation occurred.
- Make sure you have a valid complaint. If the court determines that your lawsuit against the IRS is not based on sufficient grounds, the court may order you to pay damages to the IRS.