Disputing Taxes Owed to the Internal Revenue Service and California Taxing Authorities, Inside and Outside of Bankruptcy

Options are available when a tax controversy arises with the Internal Revenue Service and the California Franchise Tax Board. Outside of bankruptcy, taxpayers may seek penalty relief, request reconsideration of an audit, or file an offer in compromise based on doubt as to liability, or seek innocent spouse relief. Unbeknownst to some, even during bankruptcy, a debtor can bring an adversary proceeding under 11 USC § 505(a) to reduce a potentially large debt based on new evidence.

In a recently published article, Steven L. Walker examines strategies for taxpayers who dispute the amount owed to the Internal Revenue Service or a California taxing agency, such as the California Franchise Tax Board. The article explores addresses procedural options, which may allow a taxpayer to reduce debt and may be considered as part of a larger strategy, including filing bankruptcy to discharge debts and challenging the merits of a tax claim in bankruptcy court.

For a copy of the article, please refer to the 2026 edition of the California Bankruptcy Journal, which is published by the California bankruptcy forum.