Federal Tax Controversy & IRS Defense

Federal Tax Controversy & IRS Defense

An IRS notice, audit, or examination is rarely just a paperwork exercise — it is the opening of a procedural process with deadlines, evidentiary rules, and exposure that can compound quickly if mishandled. John Montague, Esq. represents businesses, fund managers, and high-net-worth individuals across Florida in federal tax controversies, from initial examination through Appeals, collection defense, and Tax Court litigation.

When Tax Controversy Counsel Matters

Most clients first encounter the IRS through a CP-series notice, a Letter 2205, or an examination opening. The instinct is often to respond directly — and sometimes that is fine. But several scenarios are inflection points where counsel changes outcomes: (1) the examination involves transactions structured to produce specific tax results (partnerships, fund vehicles, M&A earnouts, equity compensation); (2) the IRS is asserting a position your CPA did not anticipate; (3) the case has criminal-referral risk; or (4) the dollars at stake justify the cost of preserving Tax Court litigation rights. In any of those situations, getting counsel involved before the first response is sent is the single highest-leverage decision a taxpayer makes.

Key Phases of a Federal Tax Controversy

Examination

The audit phase is where the factual record is built. Information Document Requests (IDRs) must be answered carefully — the responses define the universe of facts the IRS will work from in later phases. We coordinate with your CPA and prior advisors to ensure responses are accurate, complete, and strategically framed.

30-Day Letter and Appeals

If the examination closes with an unagreed report, the taxpayer receives a 30-Day Letter. Appeals is a separate, independent IRS office with broader authority to settle based on hazards of litigation — and it is often the most cost-effective forum to resolve disputes. We prepare protests, present at Appeals conferences, and negotiate settlements with realistic risk weighting.

90-Day Letter and Tax Court

A statutory Notice of Deficiency triggers a 90-day window to file a Tax Court petition without paying the disputed amount. Missing this window is the most common malpractice trap in tax controversy. We file Tax Court petitions, conduct discovery, and try cases where settlement is not viable.

Collection Defense

For taxpayers facing assessed liabilities, collection due-process (CDP) hearings, installment agreements, offers in compromise, currently-not-collectible status, and innocent-spouse claims all require specific procedural posture. Each has its own deadlines and pitfalls.

Substantive Areas We Handle

Common substantive controversies in our practice include: partnership and BBA audit-regime disputes, Section 1202 (QSBS) qualification challenges, fund-manager carried-interest characterization, cryptocurrency transaction reporting and basis disputes, Schedule C and pass-through reasonable-compensation challenges, employment-tax disputes including worker-classification, R&D credit (Section 41) substantiation, conservation-easement challenges, and international-information-return penalty defense (FBAR, Forms 5471/5472/8938).

Practical Guidance

Three practical points we tell every new controversy client. First, do not amend returns mid-examination without counsel — an amendment can extend statute-of-limitations periods and create new factual admissions. Second, do not assume the examination is over when the agent goes silent; the case is moving through internal review and the 30-Day Letter can arrive months later. Third, calendar every deadline the day you receive any IRS notice — the procedural penalties for missed deadlines are usually irreversible.

Frequently Asked Questions

When should I bring in an attorney instead of just using my CPA?

When the IRS is asserting a legal position (versus a math or substantiation issue), when criminal referral is plausible, when Tax Court litigation is a realistic outcome, or when the matter involves attorney-client-privileged advice that should not be exposed through CPA workpapers. CPAs are essential for examination work; attorneys add value where legal positioning and privilege matter.

Can I represent myself in IRS Appeals?

Yes — Appeals does not require representation. But Appeals officers settle based on hazards of litigation, which is a legal analysis. Self-represented taxpayers often miss settlement leverage they have. We frequently take over cases at Appeals after a CPA-led examination closes unagreed.

What is the difference between Appeals and Tax Court?

Appeals is an internal IRS settlement function. Tax Court is a federal court — a separate judicial branch. Most cases settle at or after Appeals; Tax Court is for genuine disputes where settlement is not reachable. The procedural rights differ significantly.

Do you handle Florida state tax controversies too?

Florida has no state personal income tax, but Florida sales and use tax, corporate income tax (yes, Florida has corporate income tax), and intangibles audits are real matters we handle. See our State & Local Tax (SALT) Strategy page for details.

Related Practice Areas

State & Local Tax (SALT) Strategy for Florida Businesses · Securities Law · Cryptocurrency Taxation Advisory · Investment Management Law