Charlotte

In a banking city like Charlotte, the IRS problem that brings you to a tax attorney may start with your pay. Stock awards can push up your income the year they vest, and a bonus may have too little tax withheld. After a stock-plan sale, a CP2000 notice may propose tax on pay already reported on your W-2.

If the dispute goes to court, it can be tried in Charlotte, where the Tax Court holds sessions and the federal district court sits on West Trade Street. Households across the South Carolina line can also ask the Tax Court to hear their case here.

Whiteford Tax Defense represents individual taxpayers, closely held companies and business owners across the region from our SouthPark office on Colony Road. We can take a case from the IRS's opening letter through Appeals and, when the numbers justify it, into court. We also handle North Carolina Department of Revenue assessments.

Tax deadlines are usually short and rarely flexible, so call early with the notice in hand. We will explain the deadline and your realistic options before you decide whether to hire anyone.

Stock awards and bonuses in Charlotte's banking economy

Charlotte is one of the country's major banking centers. Pay in banking and finance can include restricted stock units, stock options and bonuses. Each is taxed on its own schedule. Restricted stock units are generally taxed as wages when they vest and the shares are delivered. For a nonstatutory option, the spread, meaning the share's value minus the price you pay, is taxed as wages when you exercise it. So a year with a big vesting or exercise can carry far more income than your salary suggests.

Your employer may withhold on a bonus at a flat supplemental rate, not the method it uses for regular pay. If withholding and estimated payments fall short over the year, an underpayment penalty can be added to what you owe. Incentive stock options work differently. Exercising one generally creates no regular taxable income, but it can trigger the alternative minimum tax that year.

Where a Charlotte tax case is heard

When the Independent Office of Appeals can't resolve a dispute, you choose a court. The U.S. Tax Court holds sessions in Charlotte and hears a deficiency case before you pay. A refund suit comes later: you pay the tax, file a refund claim, and sue once the IRS denies it or six months pass.

Before you can sue, most taxes must be paid in full. Divisible taxes, such as the trust fund recovery penalty or employment tax, are the exception. For those, you can pay the amount owed for one employee for one quarter, then sue for a refund. That makes suing a workable path when the IRS names you a responsible person.

A refund suit in district court is filed where you live. For Mecklenburg and the other Charlotte Division counties, that means the courthouse on West Trade Street. There, either side can ask for a jury, and appeals go to the Fourth Circuit. Cabarrus and Rowan counties are in the Middle District, so a federal case from there would be heard in Greensboro or Winston-Salem instead.

The other refund court is the U.S. Court of Federal Claims, based in Washington. It sits without a jury, though its judges can hear cases anywhere in the country. Its appeals go to the Federal Circuit, so it follows that court's precedent rather than the Fourth Circuit's.

So the choice of court turns on a few questions: whether you can pay first, how the facts look, and what Fourth Circuit law says. Decide early, typically well before Appeals closes its file.

Why Fourth Circuit law controls a Charlotte case

A Charlotte resident's Tax Court case is generally decided under Fourth Circuit law, even if the income was earned elsewhere. The rule comes from the court's own decision in Golsen v. Commissioner (1970). The Tax Court follows the precedent of the appeals court that would review its decision. For a person, as opposed to a company, that is the circuit where you legally live when you file the petition.

Say your family moved to Charlotte from New York or Atlanta and petitions over a year spent there. The Tax Court will apply the Fourth Circuit's decisions, not the Second Circuit's or the Eleventh's.

Some of that law was made near Charlotte. Belk v. Commissioner (2014) involved a golf course on land spanning Mecklenburg and Union counties. The easement deed let the owner, on certain conditions, swap other land for the protected acreage. So the Fourth Circuit held that the restriction was not granted in perpetuity, and the gift did not qualify for a charitable deduction. It also refused to let a savings clause in the deed fix the problem. A Charlotte taxpayer defending a conservation easement deduction does so under that ruling.

Communities we serve

The Charlotte office serves clients in Charlotte and in Mecklenburg, Union, Gaston, Cabarrus, Iredell, Lincoln, Rowan, and Cleveland counties. Because IRS work is federal, we can represent you wherever the IRS assigns your examination. We also help clients here who have filing obligations in Maryland, Virginia, the District of Columbia, or another state where the firm has offices.

Meet Michael

Michael March

Partner, Co-Chair Tax Section

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