Tax Litigation Archives

Substantial Variance Doctrine for Informal Tax Refund Claims

Taxpayers often submit refund claims when they discover that they overpaid their taxes. Taxpayers usually do this by submitting a formal refund claim using the IRS’s prescribed forms. But this is not always required. In many cases, taxpayers will submit so-called “informal refund claims” to the IRS during the course of an IRS audit. The…

Tax Refunds Lost to Timing Rules: Lesson, File Early, Pay Late

You should always pay your taxes on time, right? After all, early payment avoids tax penalties and interest, and shows good faith compliance with tax obligations. This is not always the best approach. Why? Taxpayers who pay early or even on time may be precluded from getting money back from the IRS if they overpaid…

Attorney Fees in Tax Litigation: Jury Says Yes, Judge Says No

In most litigation, each party pays their own attorney fees regardless of who wins the case. This “American Rule” applies even when one party is clearly right and the other clearly wrong. But litigation against the government, such as tax litigation, presents a unique inequity. When taxpayers are forced to defend against an incorrect IRS…

A Government Step Transaction Doctrine

When taxpayers weave together various tax rules to produce a favorable outcome, the IRS will often cite various judicial doctrines to avoid the result or to unwind the transaction. This can include economic substance, the step transaction doctrine, etc. These doctrines allow the IRS to effectively reverse the tax treatment of transactions when multiple tax…

The Rules of the Game: Burden of Proof in Tax Disputes

Every relationship has rules, whether informal or formal. Every human interaction has them too. One can easily see this in forced relationships. Take organized sports, for example. Organized sports are essentially pre-planned interactions governed by specific rules that all parties agree to follow. The effectiveness of the rules hinges on proper enforcement, which often requires…

About “Sandbagging” in Tax Litigation

The litigation process requires parties to adhere to various procedural rules. These rules are intended to ensure fairness and efficiency in the court process. One of the most critical aspects of this process is the discovery phase, where parties exchange information and evidence relevant to the case. Some litigants may attempt to gain an unfair…

IRS Can Sidestep Taxpayers’ CDP Rights by Applying Overpayments

Imagine that Congress sets out a remedy to curb IRS abuses. And further consider that after the taxpayer pursues the remedy, the rules allow the IRS to simply sidestep the remedy. So the remedy is no remedy at all. That is what we have in the Zuck v. Commissioner, No. 25125-14L (U.S.T.C. Apr. 6, 2022)…

The Unanswerable Discovery Request

Have you ever been asked a question that you should probably know the answer to, but you don’t fully know the answer or have access to information to find the actual answer? This is a frequent occurrence when it comes to litigation and, in particular, tax litigation. The litigation discovery process involves exchanging relevant information…

Relying on Filing Deadline in IRS Notice of Deficiency

Those outside of the tax world often assume that the IRS approaches taxpayers fairly and aims to reach equitable outcomes based on a strict reading of the tax code. This often is not the case. The IRS frequently takes an overly adversarial stance leaning in the government’s favor. This can include adopting positions and interpretations…

Limiting IRS Access to Your CPA & Tax Attorney Records

A core principle of U.S. law and a foundation of our legal system is the presumption of innocence. The burden of proof lies with the accuser, not the accused. This underpins the right against self-incrimination and the right to legal counsel to mount a vigorous defense. However, this framework unravels if the accuser can access…